The New Orleans real estate market has come alive in the last 4-5 weeks. Interest rates are still good closing at 5.5% today. One of the things I have learned in the last two to three months is the value of the FHA loan when it comes to condos and homes. There are several advantages which I will touch on briefly so you can get some ideas. It may save you thousands.
You still may be eligible for the $8000 tax credit that ends this November so check this out as well. Real Estate season started late this year but is now in full swing.
- The downpayment is 3.5% for an FHA loan where as Conventional financing is at least 10% and more. This has to be your primary home.
- The credit scores are relaxed and you do not pay extra for a loan if you have average credit as you may have to do with a conventional loan.
- The Mortgage Insurance is almost half of what a conventional mortgage is at this time. This is an insurance premium you will pay if you put less than 50% down. On a $200,000 loan the FHA fee is about $110 per month with the 3.5% down.
- The seller can give you up to 6% of the loan amount in concessions. For a condo this is going to be much less since insurances are in the condo fees. This will also help you pay for the FHA upfront insurance fee along with your other closing cost. This means you can get in for 3.5% if we figure the numbers correctly. This means if you borrow 200k, they you need $7500 of your own money.
The one big issue is weather the condo association can be financed by being on the FHA condo list or by doing a spot approval. Please chose a local lender as they will be far more knowledgeable than an out of town person. An agent can help you with the questionnaire to see if the condo may pass the requirements before starting.
Its always better to know that you will have a high probability of success. This is where a knowledgeable condo agent and lender are very valuable. Here is the questions that are asked to condo association to determine if you can do a spot approval. Spot Approval Process.
There are some very good lenders but there is a special one in Jeff Bollinger ” The FHA Expert ” is one who is an FHA expert in my eyes. He has a weekly blog that can answer many of your questions just by reading his thoughts and many comparisons he makes. A true expert indeed. This is where I go to look for answers when I need to have a question answered. He is not local but has the answers for everyone to read and think about.