FHA loans are making comeback in Visalia, Tulare
Government backed Federal Housing Administration (FHA) loans are making a strong comeback here in the southern San Joaquin Valley, and you may only need a 3.5% down payment. The FHA loans picked up more than 20% of the market share in the spring, up from 18% at the beginning of the year and 12% the year prior, according to data originally compiled by Alisa Wolfson from Black Knight’s March 2023 Market Monitor Report.
“A cooling market lacking the multiple bids and all-cash offers of the recent past has made sellers more receptive to FHA offers. That, combined with a recent reduction in FHA mortgage insurance premiums and a mid-month increase in the FHA-to-conforming spread, made FHA loans comparatively more attractive,” says Andy Walden, vice president of enterprise research at Black Knight.
For Valley buyers, FHA loans can be easier to qualify for than standard mortgages ands require less elapsed time for major credit problems to pass, like bankruptcy. Furthermore, this year, the U.S. Department of Housing and Urban Development (HUD) announced a 30-basis point reduction to the annual mortgage insurance premium for homebuyers who obtain an FHA-insured mortgage, reducing the premiums from 0.85% to 0.55% and saving Americans an estimated $678 million by the end of the year. (FHA loan borrowers are typically required to pay a mortgage insurance premium, which is essentially an insurance policy for the lender to help protect from borrowers who may default.)
What is an FHA Loan?
These loans are government-insured by the FHA, an independent regulatory agency that provides supervision, regulation and housing mission oversight for Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. Essentially, they let home buyers with less-than-ideal credit or smaller down payments purchase a home, refinance an existing mortgage, or renovate a home by taking out a second mortgage.
Some one with less than stellar credit. Experts say in addition to the monthly mortgage insurance rate dropping substantially a few weeks ago, the credit score factor plays a big role in who should consider an FHA loan.
It used to be a credit score above 700 buyers would use a conventional loan, but lately it can be clients with credit scores over 700 still benefitting from an FHA loan program. We urge you to contact a mortgage lender in your marketplace and get the most up to date information directly from your preferred lender.
Keep in mind that in most parts of the country, FHA limits for a single-family home are capped at $472,030, compared to $726,200 for a conventional single family home loan.
One more important thing regarding FHA loans, they require little down payment money which is important for many first-time home buyers, says Lawrence Yun, chief economist and senior vice president of research at the National Association of Realtors (NAR). With an FHA loan, a minimum down payment can be as low as 3.5% of the purchase price.
Call your local lender today and talk to a professional, you could be in a new home before Thanksgiving.
Jeremy Engle is the Owner/Senior Loan Officer at Vero Mortgage, a division of Country Club Mortgage with offices in Visalia, Dinuba, Hanford, Fresno, San Luis Obispo and now available in the Eastern Sierra Nevada town of Mammoth Lakes. Jeremy can be reached at Jeremy@jeremyengle.com or 559-734-5000 in the Valley, 805-544-2775 at the Coast or 760-914-4413 in Mammoth Lakes.
This article originally appeared on Visalia Times-Delta: FHA loans are making comeback in Visalia, Tulare
