FHA MAY save the day!
We are concluding the first week of business with the new loan level price adjustments and surprisingly there aren’t as many questions about it as I thought there would be. Maybe the word hasn’t gone out yet? Maybe with the market movements the impact on pricing isn’t as obvious? Maybe a bunch of other things or maybe nothing? That said, we do need to be aware of what is going on and prepare ourselves and our people with the best information available.
One of the things I did see from a client is that in certain cases with specific credit scores and loan to values, FHA can be a huge benefit when it comes to monthly payments for those with ABOVE 680 credit scores. One customer was at 718 and his combined payment was more than $200 a month lower going FHA than conforming at 3% down. Again, you need to do the math on each specific case, but it is important to be aware!
As we all know. There are some agents in the market who have a great disdain for FHA borrowers and often will try to convince their sellers to not accept an offer FHA financing. I think it’s a shame that those few ignorant agents perpetuate a belief that FHA is a bad loan or that FHA people are not good borrowers. Imagine limiting the buyer pool for your seller because the agent is ignorant? Why is this so? Often the excuse is the FHA appraisal. Currently, why do they still fall back on that old excuse?
The time has come for all good mortgage professionals to share the actual information. Run the numbers and do the math! Bring in or interview an FHA appraiser to go over the FHA appraisal process and share the facts. Most of the FHA appraisal issues come in the form of condition issues the require repairs, and most of those issues will come up in a routine property inspection report! We must get out in front of this, especially when the next series of LLPA arrives on conforming loans in August for anyone with a DTI of 40% or more!
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