Winter Haven, FL: Some Common FHA Loan Myths… Busted!

Posted by Kevin Sandridge
January 12, 2009

With the increasing popularity of FHA loan programs here in Winter Haven, I’m amazed at how many “myths” that seem to be floating around.  Folks are obviously starting to do their homework, which is great!  However, I figured I’d point my local Winter Haven home buyers and potential refinance clients in the right direction on a few key points:

FHA program and many FHA myths still abound. Here are a few points of clarification…

MYTH: It’s harder to qualify FHA.

False: Qualifying is far easier with FHA! Just a few of the benefits here include:

MYTH: FHA is only for low income or first time homebuyers.

False: Second or third or even fourth time homebuyers here in Winter Haven, FL can take advantage of all of the exact same FHA features as low income and first-time homebuyers.

These include easier qualifying, low down payment, options, and – FHA does not have income limitations!

MYTH:  FHA is ONLY for high Loan to Value (little money down) loans.

False: This Myth came about largely because FHA always requires both Upfront Mortgage Insurance (UFMIP) – to protect the lender – and, with few exceptions, annual/monthly mortgage insurance.

Still, Low LTV loans were always approved FHA when they couldn’t qualify for a conventional conforming loan.

Today, low LTV FHA mortgages are increasingly panning out to be the best loan option for many low LTV buyers here in Winter Haven.

Due to Fannie and Freddie’s tightening underwriting guidelines, more loans are “referred” leaving FHA the best, if not the only option.

The main thing FHA loans allow many Winter Haven, Florida homebuyers to sidestep are the countless extraneous fees that seem to be adding on to conventional loans on a near daily basis!   Whenever a conventional loan ends up with higher than market rates, it’s always wise to compare FHA, regardless of the LTV. The results may just surprise you.

MYTH:  Many homes don’t qualify for FHA loans.  If they do, the homes always need repairs and extra inspections.

False: Although previously true, FHA’s appraisal and property rules underwent an overhaul back in early 2006. [ML 2005-48]

For instance: termite, septic, well, and flat roof inspections are no longer automatically required – only if it appears that a problem exists.

Examples of conditions that do not automatically require repair are cracked windows, poor workmanship, cracked plaster, minor plumbing leaks, worn/badly soiled carpet, bare floors, lack of handrails, and more. HUD still requires that all paint remain intact when the home was built prior to 1978, and that all mechanical systems are in working order.

Realistically, the property requirements remain a little tougher than those connected with conventional loans, but they’re a lot less restrictive than they were.

Unless it’s a major problem, like pealing lead-based paint – you should be fine.  (Note:  Keep a copy of the Mortgagee Letter on hand for those appraisers who missed the rule changes.)

If you’re considering a Winter Haven, Florida home purchase using an FHA loan, give me a call at 863-604-3019.  We’ll go over your financial situation and make sure things are in order.

Apply for a Florida FHA Home Loan Today

Kevin Sandridge
The Florida Mortgage Pro
Signature Home Funding
410 Laurel Cove Way
Winter Haven, FL 33884
Mobile: 863-604-3019
Fax: 888-496-0265

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