Anyone ever do an FHA loan?

posted 3 years ago in Home
Post # 4
Member
7281 posts
Busy Beekeeper
  • Wedding: October 2011 - Bed & Breakfast

I would want to have a lot more in savings before buying a home, regardless of which loan type I chose. Home ownership comes with lost of unexpected expenses. Our goal was to have our down payment + closing costs + 6 months of living expenses in the bank before we started house hunting.

Post # 7
Member
7281 posts
Busy Beekeeper
  • Wedding: October 2011 - Bed & Breakfast

@BellaDee:  I’m sorry you are disappointed. We went into it with the plan to pay for the entire wedding ourselves, so we were able to avoid that situation. It’s tough to be so close and then have to step back and start saving all over again. We live in a HCOL area and had a goal of a 20% down payment, so we were literally saving for years to meet our own goals. As frustrating as it was, it was worth it to us.

Edit: Lenders generally want to see that, after paying the dp and closing costs, the buyer will have 4-6 months of mortgage payments still chilling in their bank account. Basically the lender wants to know that if you lose your job the day after closing, you will still be able to pay the mortgage for a bit. They do not like to see that an account would be practically empty on closing day.

Post # 8
Member
2642 posts
Sugar bee
  • Wedding: September 2012

@lovekiss:  +1

I agree that you need to have more in savings before you decide to purchase a house.  You aren’t just paying a mortgage, you are now responsible for the general upkeep of the house.  There are always unexpected costs when moving into a new home – repairs, updates, new furniture, new tools, etc.  Even if everything seems fine right away, there will surely be something in the first few months you’ll have to do.  I would advise having an extra $5-10K JUST for house stuff on top of your down payment, closing costs, and other savings. 

It sucks to rent, but even with an FHA loan, it might be good to rent one more year before buying.

Post # 11
Member
9253 posts
Buzzing Beekeeper
  • Wedding: September 2012

@BellaDee:  However, keep in mind with an FHA loan you’ll be paying PMI which gives more security to the lender so your savings might be sufficient already.  Ask your loan officer to be sure.  🙂  Hang in there!  My husband and I are in the process of building a custom home right now and it’s FUN – all except the financial part, lol, so I feel your pain. 

Post # 12
Member
4296 posts
Honey bee
  • Wedding: June 2012

@BellaDee:  I would aim for going with a conventional loan vs FHA. You have to have PMI insurance regardless but it’s much more expensive when you choose FHA. We are closing on a house with a conventional in the next few weeks. We had to have more for the down payment but it equals much less then if we paid the higher PMI for the FHA.

Post # 14
Member
2642 posts
Sugar bee
  • Wedding: September 2012

@BellaDee:  I completely understand the desire to stop renting and build equity in your own place.  But you really need to have a contingency fund before you purchase.  $800 a month might be enough to cover any unexpected expenses.  For instance, H and I just bought our first house.  In the first 4 months we have put on a new roof, made repairs to our septic field, made repairs to our well, painted the entire house, bought a lawn mower, bought a weed whacker, bought a bunch of new tools, bought new furniture, replaced the dishwasher, replaced the stove, and are in the process of redoing one of the bathrooms.  We have to get a tree removed (which will run us about $4K).  We also really need to get someone to check out our electrical work in the house and make some changes to our water filter.  Granted, we knew a lot of this coming in so we had a lower downpayment so we could have the extra cash handy for all of these repairs, but you get the idea of what might need to be done.

Now, if you purchase a condo or townhome, you probably won’t have a lot of the yard maintence to take care of.  But unless you buy new construction, you could still have lots of other repairs to make.  Everyone I know who’s purchased a house has had a lot of initial reparis/updates.  And even if you do buy new construction, there will probably be things you need to purchase right off the bat (tools, stuff for yard maintenance, etc.)

Post # 15
Member
3538 posts
Sugar bee
  • Wedding: September 2013

@BellaDee:  We are getting ready to close on our FHA loan.  There are down payment assistance programs that you can talk to your lender and see if you qualify.  Ours pays 3% of our 3.5% down payment.  Also, you can negotiate some of the closing costs to be covered by the seller when you put an offer in on a house.  We did that, and when we close next Friday, we only need to bring about $120 to close because the money we got for closing costs pretty much covered the closing costs plus the remaining down payment amount.

(Note…Here, housing is way cheaper that NY, so this may vary.  We bought a 1800sq ft house for only $118 with an inground pool, therefore our closing costs were only about $2500) 

Post # 16
Member
4296 posts
Honey bee
  • Wedding: June 2012

@BellaDee:  With our conventional we only had to put 5% down…

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