Today we are going to discuss two common mortgage loan products, and the pros and cons of both: FHA versus Conventional Loans.
Many people are familiar with the 20% down, good credit 30 year fixed conventional loan scenario. FHA loans are designed for people who have difficulty qualifying for a conventional loan to buy a house.
FHA Loans offer down payments as low as 3.5% and are more lenient on credit scores and past financial issues. Borrowers can qualify for FHA loans with as low as 580 credit scores.
One of the downsides of FHA loans are mortgage insurance requirements, if you put down less than 10% you will be required to pay monthly insurance for the duration of the loan, as well paying Upfront Mortgage Insurance Premium.
The best choice for you? Give us a call or apply online and we will analysis what programs suits your needs 😊
Market Watch – Rates Drop 📉
This week we saw the benchmark 30-year fixed rate mortgage fall below 3% again according to Freddie Mac. While 15-year fixed-rate are down to 2.27%. This opens opportunities for refinancing and rate locks for many borrowers.
Sam Khater the chief economist at Freddie Mac noted that this creates a lot of opportunity for borrowers to refinance and increase monthly cash flow, with nearly $2 trillion in conforming mortgages able to refinance and reduce their interest rate by at least half a percent. He said last year homeowners who refinanced their 30-year fixed-rate mortgages saved more than $2800 annually.
Renting vs Buying in Major Markets? Buying Wins
We’ve seen housing prices rising throughout the country so you may ask is buying still better than renting? According to a recent study from researchers at Florida Atlantic University and Florida International University, it is still better to buy than rent in most areas.
The study looked at the top 23 metropolitan markets and analyzed if buyers bought a house and built equity or rented and reinvested the remaining income. Overall they found it was better to buy with savings coming from today’s still low interest rates, which lowered home owner costs even with the rise in housing prices. Of course all real estate is local so while the overall message of buying being the better strategy, results varied region to region.