Chicago mortgages include FHA loans, and many people think (erroneously) that they know all there’s to know about them. Here are some facts about them you probably did not know. Yet they might make you see FHA loans as the loans for you.
1. You don’t need credit scores to qualify for either the regular FHA loans or the 203K loans.
You can just show you’ve paid bills on time for the 12 months before you apply. Give your loan officer either 12 months of cancelled checks made to your phone company, gas company, etc.or 12 months’ worth of bank statements showing on-time electronic payments to your phone company, etc.
2. Cash gifts are allowed (to help you pay for the down payment and closing costs).
You must have 3.5% of the loan amount as down payment, but it can be a gift from a relative or close associate. The donors must be willing to give you the gift, fill out a form that states they funds are a gift, and show bank transaction history to prove they had the funds they’re gifting. And that’s it!
3. The upfront mortgage insurance doesn’t have to come out of your pocket, it can be rolled into the loan.
There is an upfront mortgage insurance premium of 1.75% of the loan, but it can be rolled into the loan. On larger loan amounts, it’s real money we’re talking about ($4,371 for a loan of $250,000).
4. You can get up to 6% seller credit.
You can get up to 6% seller credit. (Actually, you can get credit from other parties too. The total cannot exceed 6% of the sale price.)
You can apply that credit to closing costs, prepaid expenses, discount points, and other financing concessions. You cannot apply it to your down payment, to reduce your loan principal, or otherwise get any amount above the actual closing cost amount.
5. You can refinance an FHA loan without credit or income. Or even appraisal.
FHA’s Streamline refinance allows you to refinance your FHA loan without showing income, credit scores, or an appraisal. (Unless you want to cash-out, then you do need an appraisal.) Lenders have to check only your mortgage payments over the previous 12 months.
6. Non-occupant co-borrowers are allowed.
Non-occupant co-borrowers are allowed (so a relative with better income can be on the loan to get you to qualify). Even if they already own a home. Or if they like you enough to get a loan with you but not to live with you.
7. You can make all kinds of repairs and upgrades to your home with an FHA 203K loan.
FHA’s 203K loan program allows you to demolish a property and build a new one in its place (as long as you keep the original foundation). It also allows you to buy a home that needs work or to remodel your existing home.
8. You can install solar panels on your home with an FHA loan.
There’s an FHA loan program to help pay for installing solar panels. It is called FHA’s Solar and Wind Technologies Program. It allows you to add the full cost of solar panels to the loan. The loan amount with the panels in cannot exceed county limits. But it’s quite useful. Solar panel costs have come down lately. Still, they are significant. For a 1300 square feet house in my area, they cost over $20,000.
9. You can build a brand new house with FHA loans, Chicago!
Yup, you can add FHA loans to the box of Chicago mortgages for construction. This is a real construction loan, you don’t have to buy an old house, raze everything but keep the foundation. You build a house from the ground up. You can buy a lot and build on it or, if you already have a lot, you can get an FHA loan to cover the construction costs.
FHA Loan Facts Conclusion
I hope these FHA loan facts helped you get a better idea of how useful FHA loans are. The thing about Chicago mortgages is that many people think they know them well when, in fact, they do not. This includes FHA mortgages. You miss one little fact about them and you can miss out on a really good deal.
