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Health & Fitness

How to Pick the Home Loan That's Right for You

Here's how more costly FHA loans stack up against 97 percent conventional loans.

ST. LOUIS HOME BUYERS CAN ACCESS FHA SIMILAR CONVENTIONAL LOANS IN LIEU OF RISING COSTS OF A FHA LOAN
 
The Federal Housing Administration (FHA) has changes coming on April 1 impacting homebuyers relying on FHA loans for affordable financing.  Some cost changes are in store for borrowers. Acting quickly on a FHA purchase or refinance to avoid additional expense is a smart idea! 

If you aren’t ready to buy or apply for a loan, no worries, there are other lending options available to you.  “There are lenders in St. Louis that routinely close 97% conventional loans which carry very affordable PMI premiums (relative to FHA). The 97% conventional loan with a slighter higher rate is still less per month due to the ever rising cost of the FHA mortgage insurance (MI) premiums,” said Ruzicka, a B. Taki blog poster commenting on last week’s blog.

“To qualify for a conventional loan, a credit score of 720 or above is considered good. Note, the 95% & 97% conventional loans are quickly defeating FHA loans for many first time home buyers. A buyer can really take advantage of these low rates when they combine seller paid closing cost and use single premium mortgage insurance. Not every lender can offer this or may be aware of the huge cost savings available says Frank Ruzicka, Senior Loan Officer with Cornerstone Mortgage.

There is another issue that some borrowers need to contend with after our lingering and devastating home market riddled with foreclosures and short sales.  The FICO scores are lowered for borrowers whose only option was foreclosure for their homes.  Your FICO score is compiled with information in your credit report. Strong FICO scores can give you access to better interest rates.

Per myfico.com, “A foreclosure remains on your credit report for seven years, but, its impact will lessen sooner. If you keep your credit obligations in good standing, your FICO score can begin to rebound in as little as 2 years.”

A waiting period usually applies after a major credit issue. Foreclosure will negatively impact a credit score and different types of loans carry different standards. When a buyer is applying for an FHA loan after a foreclosure, the typical waiting time for loan approval is three years. However, it could be less than three years with a qualifying event.  These restrictions for a borrower looking to qualify for a conventional loan are also three years from the foreclosure sale or seven years for a 2nd home.

Shopping for a loan is important, whether it be for a FHA or conventional loan. Seeking the assistance of a lender is imperative to review your individual scenario and offer the best case scenario for your needs!

CLICK HERE FOR VIDEO TO MY VIDEO - BUYING A HOME

Beverly Taki, Missouri-licensed real estate broker
For Over 25 Years 
Keller Williams Realty St Louis.
10936 Manchester Road, St. Louis, MO   63122
314.677.6366
beverlytaki@kw.com
www.beverlytakistlouis.com
Beverly Taki Blog


Beverly has earned a certificate in dispute resolution from Pepperdine University, specializing in negotiation and mediation.

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