If you are buying a home in Logan, Utah a FHA mortgage can be a great option. Here is why...
1. Only 3.5% down payment required
2. The interest rates are not credit score driven. This means that whether you have a 620 credit score or 800 credit score, your interest rate will be the same. If you have less than a 700 credit score, FHA may be your best or only option.
3. The interest rate on a 30 year fixed FHA loan is at 5.0% today (APR 5.566%).
4. Unlike conventional loans, FHA loans are assumable. This means that somebody buying your home in the future can assume your 5.0% FHA loan with minimal closing costs. This could be an amazing selling feature in the future if interest rates go up like most experts predict they will.
5. FHA has more lenient guidelines than conventional loans.
A FHA loan probably does NOT make the most sense for you when...
1. You have a 700 credit score or better and want to put 20% down. Conventional would make more sense in this case because you won't have to pay mortgage insurance.
2. You are buying a fixer upper that won't qualify for FHA.(Consult with your Realtor and Loan Officer to see if it qualifies.
3. You are buying a home in Smithfield, Hyde Park, Nibley, Hyrum, or anywhere in Cache Valley besides North Logan, Logan, River Heights, and Providence. If you buy in those areas, you could do a Rural Housing loan which is 100% financing and does not require monthly mortgage insurance.
Other things to be aware of with FHA...
1. If you are buying a home before 1978, the seller must repair any chipping paint before FHA will allow you to purchase it.
2. FHA will require safety issues to be repaired before closing (e.g. Missing hand rails, broken windows, other repairs that the appraiser notes on the appraisal report).
3. You must pay monthly mortgage insurance for a minimum of 5 years. After 5 years, once your loan balance reaches 78% of the value of the home, the mortgage insurance will fall off.
If you are looking to purchase a home in Cache Valley, Utah or surrounding areas, give me a call at 435-770-2709. I look forward to working with you!
About the Author
John Neil is a loan officer that is passionate about his profession. His goal with every transaction is to make a customer for life. The result is that 95% of his business comes from referrals of satisfied clients. If you need a cache valley mortgage, you can contact John at 435-770-2709. You can also follow him on twitter @LoganUTMortgage or facebook @facebook/MortgageNerd
