Thursday, March 18th, 2010
Just last week my Broker refunded money back to a client whom he had recently refinanced. My Broker had audited the file and discovered that he had been paid about $600 too much by escrow due to a clerical error. So, he sent a check back to his client. Boy was that client pleasantly surprised. I, however, was not surprised. That is who my Broker is. The Broker could have just kept the money, and no one would have been the wiser. But he had promised the client that the cost of the loan would be a certain amount. And he kept that promise.
If you want an ethical Broker for your Real Estate needs, please contact my Broker, Geoffrey Gault. 408-573-0811 office or gwgault@gmail.com
Sunday, March 7th, 2010
Getting an “FHA loan” is not correct terminology. It is a bit of a misnomer and has caused confusion for home buyers. FHA itself stands for Federal Housing Administration. FHA doesn’t give you the loan. You get a loan from an FHA-approved lender, and FHA insures that loan.
FHA mortgage insurance protects the lender against loss in case the home owner defaults on his mortgage. The lender has less risk because FHA will pay a claim to the lender if the homeowner defaults.
FHA insured loans have a few advantages these days over conventional loans. For one thing, home buyers who qualify can put down as little as 3.5% on the purchase of a home. These days no conventional lender will allow such a small down payment. You would be hard pressed to find one who would allow less than 10% down.
Other advantages to an FHA insured loan are that less reserves are required in order to qualify, and a borrower’s credit can be less than perfect. Conventional lenders currently want to see more reserves than the FHA, and they want to see higher credit scores.
With an FHA insured loan, the borrower will have a 1-time upfront Mortgage Insurance premium, and he will also have a monthly mortgage insurance payment. The upfront premium can be “rolled” into the loan so that the borrower does not have to bring that money in to the purchase transaction.
If you are looking to buy a home now while home values and interest rates are still low, check with your Broker to see if you qualify for an FHA insured loan. Have your Broker run the numbers for an FHA insured loan as well as for a conventional loan and show them to you.
Oh! I almost forgot! Interest rates for FHA insured loans are typically in the same low range that rates are for conventional loans. Make sure you read my post about paying points as well. That’s another thing you want to ask your Broker about. Is he getting a rebate that you don’t know about that is making your interest rate higher than it needs to be?? Check it out, know your options. Be a smart informed borrower. You can always reach me through my contact page if you have any questions.
