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Old 04-07-2010, 03:47 PM   #1
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FHA home loan

I am looking at buying my first house. I have talked with my bank, and they thinl fha is the best bet for me since I only have a few grand. On their fixed rate they need at least 10 percent down. I want to take advantage of the home buyers tax credit so I am trying to get something by the end of this month. I am norrowing it down between a few properties I like. I am having my uncle who is the firemarshall walk through these homes with me to inspect them thourouly. So I am confident in chooseing a quality home.

Now the fha loan is of course a federal loan from the government, my banker told me the loan is fixed for the first seven years, then it reajusts. Scarry huh? My banker suggests I take this loan on todays low interest rate, build up equity on the house, and a few years refinance with the banks fixed rate.

Has anybody done an fha loan? I am leary on it. I do not like the fact that in seven years it will adjust. I would much rather have the banks fixed rate, but saving that much more for the downpayment will take a long time, and I will miss out on getting that money back with the govts tax credit. All opinions apreciated

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Old 04-07-2010, 03:54 PM   #2
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I would not go for an ARM at this time.
Rates aren't likely to go much lower and there's an almost certain chance they will be significantly higher in 7 years the way we've been borrowing money.

Good luck.

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Old 04-07-2010, 04:09 PM   #3
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Quote:
Originally Posted by kilgoretrout844 View Post
I am looking at buying my first house. I have talked with my bank, and they thinl fha is the best bet for me since I only have a few grand. On their fixed rate they need at least 10 percent down. I want to take advantage of the home buyers tax credit so I am trying to get something by the end of this month. I am norrowing it down between a few properties I like. I am having my uncle who is the firemarshall walk through these homes with me to inspect them thourouly. So I am confident in chooseing a quality home.

Now the fha loan is of course a federal loan from the government, my banker told me the loan is fixed for the first seven years, then it reajusts. Scarry huh? My banker suggests I take this loan on todays low interest rate, build up equity on the house, and a few years refinance with the banks fixed rate.

Has anybody done an fha loan? I am leary on it. I do not like the fact that in seven years it will adjust. I would much rather have the banks fixed rate, but saving that much more for the downpayment will take a long time, and I will miss out on getting that money back with the govts tax credit. All opinions apreciated

i have an FHA. first off, its not a loan from the federal govt. it is just guaranteed (insured) by the government. Mine is fixed rate, and i wasnt aware you could get a ARM through an FHA. the downside to an FHA, is you have to pay mortgage insurance. both a premium up front, and a little bit per month. the good news is, you can write the monthly off on your taxes (or at least part of it). after 7 years and so much % paid off, you can drop the mortgage insurance. my mortgage insurance is something around $90 per month.

what rate are you getting? 5%ish looks like the going rate right now. thats pretty darn good.
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Old 04-07-2010, 04:10 PM   #4
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Thanks for the luck I think ill need it...this is scary stuff. I guess the only reason I would do the arm would be to refinance before it adjusts. Yes I probably will have a higher interest rate when I refinance, but everyone buying then will. Buying now also gets me the tax credit. If I save for two more years and get into a fixed rate, that rate will more than likely be higher than it is today. If I had ten grand saved up I would definitly get a fixed rate right now, unfortunatley I don't. Basicly is either fha or more rent, I would just assume to buy now refinance later.
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Old 04-07-2010, 04:12 PM   #5
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i have an FHA. first off, its not a loan from the federal govt. it is just guaranteed (insured) by the government. Mine is fixed rate, and i wasnt aware you could get a ARM through an FHA. the downside to an FHA, is you have to pay mortgage insurance. both a premium up front, and a little bit per month. the good news is, you can write the monthly off on your taxes (or at least part of it). after 7 years and so much % paid off, you can drop the mortgage insurance. my mortgage insurance is something around $90 per month.

what rate are you getting? 5%ish looks like the going rate right now. thats pretty darn good.
Yea its at 5% for the first seven years
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Old 04-07-2010, 04:26 PM   #6
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I puchased my first home last april. I was going to go fha but my finance guy found out I qualified for a usda loan(yes the same as usda beef). If you are in a rual area you may qualify for usda. I was prepared for 10% down, but was able to get in with no money out of pocket(5% seller consesion). This program has some restrictions, but is worth looking into.
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Old 04-07-2010, 04:28 PM   #7
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i bought my house in november and am on a FHA loan...i believe my interest was between 4.5% and 5% when i signed
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Old 04-07-2010, 04:28 PM   #8
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keep shopping. you should be able to get a 5% fixed rate FHA anywhere right now. i wouldnt do ARM either, but thats just me.

fwiw, dont be scared of the FHA, but i would be willing to give up a point or so to get a fixed rate
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Old 04-07-2010, 04:34 PM   #9
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i agree, my FHA is a fixed rate. you dont want anything sneaking up on u and biting u in the ass
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Old 04-07-2010, 10:31 PM   #10
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ARM's is part of what got home buyers in the mess we're in now. I personally would NOT tie myself into an ARM with a 7 year call. Rates now are as low as you'll ever probably see them (and I've been around a long time!) Keep looking and applying. You or I or anybody else have no idea what things will be like in 7 years, but I'm betting interest rates will be UP higher than what they are now by far. So lock into a rate even if it costs you. In the long run you'll be happy and never have to worry about 7 years down the road.
Now this advice and $3. bucks will get you a decent cup of coffee. Good Luck.

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