Mortgage best-buy comparison, best mortgages.#Best #mortgages


Mortgage Best Buys Beta

Unlike many other best buy tables we don’t just include broker only mortgages, we also show you the direct deals. The only mortgages that might be available that we can’t show are exclusives that are available to specific brokers.

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Offset Mortgages – Compare The Best Offset Mortgage Deals, best mortgages.#Best #mortgages


Offset mortgages

By Mark Hooson on Monday 21 March 2016

In this Article

Offset mortgages provide a practical and sophisticated means of balancing your savings against the debt of your mortgage – and they are becoming increasingly popular among the nation’s homeowners.

What is an offset mortgage?

An offset mortgage links your savings, and in some instances your current account, to your mortgage. As a result, instead of earning interest on your savings, you pay less interest on your mortgage.

For example, if you had a £100,000 mortgage and £20,000 in savings offset against it, you would only pay interest on £80,000. However, your monthly mortgage payments will probably be based on the full £100,000 loan meaning you effectively over pay each month. As a result not only do you pay less interest on your mortgage, you will also pay it off more quickly.

Some lenders will let you reduce your monthly payments so that they are based on the value of the outstanding mortgage once the savings have been offset. However, while this may help bring down your repayments you won’t pay your mortgage off any quicker.

Offsetting can also be extremely tax efficient. Ordinarily you pay income tax on any interest you earn on savings (apart from ISAs). However, if you offset your savings against your mortgage, you don’t earn any interest so there is no tax to pay.

Offset mortgages only account for about 6% of the total mortgages although with savings rates in the doldrums because of the low Bank of England base rate, they are becoming more popular. If you are looking for a new mortgage, an offset is definitely worth considering – it won’t be the right option for everyone though.

What types of offset mortgage are available?

As with standard mortgages there are fixed and variable rate offsets available. However, most of the offset products currently available require a deposit of at least 25%.

Some deals will allow you to offset your current account as well as your savings. You may also be able to link your cash ISA. The more savings products you can link to your mortgage, the harder your cash will be working to reduce your debt. It is important to note however, that your savings and mortgage have to be with the same provider – you can’t link a savings or current account to your mortgage if it is with a different bank.

What are the advantages of offset mortgages?

With an offset loan, you pay no tax on your savings interest, and the rate you earn is the same as your mortgage rate; as mortgage rates are typically higher than easy access savings rates, you effectively get a better return.

A key benefit is the flexibility you get, as you can always retain access to your linked savings account or current account, meaning you can dip into it at a future date as and when you need to.

By contrast, if you’d used money from your savings pot to overpay your mortgage and then decided you needed some of that cash back, you would not have the same flexibility.

While offset deals are particularly beneficial to higher-rate taxpayers and those with a large amount in cash savings, lower-rate taxpayers can benefit too.

If you have savings as well as mortgage debt, an offset mortgage can offer the best of both words, as you will still be able to access that nest egg. However, you need to be aware that if you withdraw money from your savings at any point, there will be less in the pot to offset against the mortgage.

Offsetting can be an especially useful option for the self-employed who put money aside for their tax bill, as these individuals can make their money work that little bit harder – before handing it over to the taxman.

Not for everyone though.

While an offset mortgage will work well for many people, offsetting won’t be the most suitable option for everyone.

You tend to pay a slightly higher rate of interest than on a standard mortgage, although the premium has narrowed in recent years. But it means that if you don’t have much in savings, offsetting may not work out to be best value.

There is no hard and fast rule which says if you have more the £x in savings an offset is the best option – it will depend on the mortgage and savings rates available at the time.

How can MoneySuperMarket help?

In the past, borrowers opted for a standard mortgage without giving it a second thought, but as offset deals have become more affordable, an offset is now an option that’s definitely worth considering.

At the same time, as rates have fallen, more lenders have entered the offset arena – with some now offering an offset option across their whole range of mortgage products. That said not all lenders offer offsets.

One of the best ways to see what offset mortgage products are available is to use a comparison site. With MoneySupermarket you can compare the rates available on offset and standard mortgages to work out which is most suitable for you and then apply online.

And remember, when comparing mortgages it is important to factor in the arrangement fee as well as the interest rate as fees vary significantly.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

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Current Interest Rates on Home Loans, Savings, Car loans – CD Rates, interest only mortgages.#Interest


Today’s Interest Rates and Financial Advice:

Interest only mortgages

Financial Advice

Would you like to buy a home but worry that you’d never qualify for a mortgage? It’s time to stop guessing and evaluate your chances to land a loan based on everything from how much you make to your credit score. Believe it or not, the odds are in your favor.

November 14th 2017

The average cost of financing a new or used car or truck has stayed low over the past year, making auto loans a bargain by any historical measure. And buyers with reasonably good credit can always take advantage of the discount loans automakers are offering on many models.

November 13th 2017

Lending money to your child is risky business. But if you can avoid the personal pitfalls and convince the federal government that this is really a loan, and not a gift, the Bank of Mom and Dad can be a financial boon for everyone in the family.

November 13th 2017

Here’s how to make all of the right decisions so that you’ll save more, invest wisely and take full advantage of all the tax breaks to build your retirement nest egg.

November 10th 2017

It’s not enough to find a good location at an affordable price. Condo buyers must consider lots of extra costs, from association fees and special assessments to how well the building is maintained and how strictly it enforces rules on everything from noise to pets.

November 10th 2017

You’ve scouted out the best mortgage rate and fought hard to get the best price on your new home. But your bargaining shouldn’t stop there. Here’s how you can save on everything from settlement fees to title insurance.

November 8th 2017

Interest only mortgages

Interest ing Snapshot

Individual retirement accounts, or IRAs, are a great way to build financial security for you and your family. They’re easy to open and our simple strategy helps you make all the right decisions now, and in the years ahead.

Interest only mortgages

Interest only mortgages


Second Mortgages: Basics, Pros, and Cons, 2nd mortgages.#2nd #mortgages


Second Mortgages – Advantages and Disadvantages

2nd mortgages

A second mortgage is a loan that lets you borrow against the value of your home. Your home is an asset, and over time, that asset can gain value. Second mortgages, also known as home equity lines of credit (HELOCs) are a way to put that asset towards other projects and goals.

What is a Second Mortgage?

A second mortgage is a loan that uses your home as collateral – similar to a loan you might have used to purchase your home.

The loan is known as a “second” mortgage because your purchase loan is often the first loan that is secured by a lien on your home.

Second mortgages tap into the equity in your home, which you might have built up with monthly payments or through market value increases.

Loans can come in several different forms.

Lump sum: a standard second mortgage is a one-time loan that provides a lump sum of money you can use for whatever you want. With that type of loan, you’ll repay the loan gradually over time, often with fixed monthly payments. With each payment, you pay a portion of the interest costs and a portion of your loan balance (this process is called amortization).

Line of credit: it’s also possible to borrow using a line of credit, or a pool of money that you can draw from. With that type of loan, you don’t ever have to take any money – but you have the option to do so if you want to. You’ll get a maximum borrowing limit, and you can continue borrowing (multiple times) until you reach that maximum limit.

Like a credit card, you can even repay and then borrow again.

Rate choices: depending on the type of loan you use (and your preferences), your loan might come with a fixed interest rate that helps you plan your payments for years to come. Variable rate loans are also available and are the norm for lines of credit.

Advantages of Second Mortgages

Loan amount: second mortgages allow you to borrow a large amount. Because the loan is secured against your home (which is generally worth a lot of money), you have access to more than you could get without using your home as collateral. How much can you borrow? It depends on your lender, but you might expect to borrow (counting all of your loans – first and second mortgages) up to 80% of your home’s value.

Interest rates: second mortgages often have lower interest rates than other types of debt. Again, securing the loan with your home helps you because it reduces the risk for your lender. Unlike unsecured personal loans like credit cards, second mortgage interest rates are commonly in the single digits.

Tax benefits: in some cases, you’ll get a deduction for interest paid on a second mortgage. There are numerous technicalities to be aware of, so ask your tax preparer before you start taking deductions. For more information, learn about the mortgage interest deduction.

Disadvantages of Second Mortgages

Of course, life is full of tradeoffs. Be aware of the pitfalls of using a second mortgage. The costs and risks mean that these loans should be used wisely.

Risk of foreclosure: one of the biggest problems with a second mortgage is that you have to put your home on the line.

If you stop making payments, your lender will be able to take your home through foreclosure, which can cause serious problems for you and your family. For that reason, it rarely makes sense to use a second mortgage for “current consumption” costs such as entertainment and regular living expenses – it’s just not sustainable or worth the risk.

Cost: second mortgages, like your purchase loan, can be expensive. You’ll need to pay numerous costs for things like credit checks, appraisals, origination fees, and more. Even if you’re promised a “no closing cost” loan, you’re still paying – you just won’t see those costs transparently.

Interest costs: any time you borrow, you’re paying interest. Second mortgage rates are typically lower than credit card interest rates, but they’re often slightly higher than your first loan’s rate.

Ready to start building wealth? Sign up today to learn how to save for an early retirement, tackle your debt, and grow your net worth.

Second mortgage lenders take more risk than the lender who made your first loan. If you stop making payments, the second mortgage lender won’t get paid unless and until the first lender gets all of their money back.

Common Uses of Second Mortgages

Choose wisely how you use funds from your loan. It’s best to put that money towards something that will improve your net worth (or your home’s value) in the future – because you need to repay that loan.

  • Home improvements are a common choice because the assumption is that you’ll repay the loan when you sell your home with a higher sales price
  • Avoiding private mortgage insurance (PMI) might be possible with a combination of loans – just make sure it makes sense compared to paying – and then canceling – PMI
  • Debt consolidation: you can often get a lower rate, but you might be switching from unsecured loans to a loan that could cost you your house
  • Education: as with other situations, you’re creating a situation where you could face foreclosure. See if standard student loans are a better option

Tips for Getting a Second Mortgage

Shop around and get quotes from at least three different sources. Be sure to include the following in your search:

Get prepared for the process by getting money into the right places and getting your documents ready. This will make the process much easier and less stressful.

Beware of dangerous loan features. Most conventional loans do not have these problems, but it’s worth keeping an eye out for them:


Welcome to Accord Mortgages, The intermediary only lender, 2nd mortgages.#2nd #mortgages


Say hello to a new Accord

With a host of improvements to our service and many more in the pipeline, we care because you do.

2nd mortgages

Welcome boxes are here

When your clients purchase a home with an Accord mortgage, we’ll organise a surprise for them.

2nd mortgages

Accord Product transfer

It’s an easy process to check online for available transfer deals and monthly payments.

2nd mortgages

BANK BASE RATE ANNOUNCEMENT

2 November 2017: The Bank of England announced that the current Bank Base Rate would increase with immediate effective from 0.25% to 0.50%.

We are reducing the mortgage Standard Variable Rate for Accord Mortgages and Accord Buy to Let by 0.35% to 4.99% from 10 December 2017.

We have provided a list of frequently asked questions for our mortgages customers which may answer any questions you have.

Average application to offer time:

2nd mortgages

Valuations instructed within:

of receiving app. fee.

Lending decision referral within:

2nd mortgages

Telephone waiting time is up to:

from dial to pick-up

News from around Accord

16 November 14/11/2017

We’re making the following changes to our residential product range at 9am on Thursday 16 November.

2nd mortgages

From 9am on Monday 25 September all our residential 2 & 3 year fixed rate products will revert, once the fixed rate period ends, to an SVR capped at 6.75%.

2nd mortgages

26 October 25/10/2017

We’re withdrawing 7 products from our residential range at 8pm on Thursday 26 October.

2nd mortgages

02 October 02/11/2017

Accord Mortgages has today (Thursday, 2 November 2017) announced it will be reducing its standard variable rate (SVR) by 0.35%.

2nd mortgages

We’re making changes to our residential product range at 9am on Friday 20 October.

2nd mortgages

From 8pm on Friday 13 October we’re withdrawing five products, and making changes to our residential product range from 9am on Monday 16 October.

2nd mortgages

We’re making the following changes to our residential product range at 9am on Monday 9 October

2nd mortgages

Figures from Accord Mortgages reveal a spike in the number of remortgage applications.

2nd mortgages

We’re delighted to announce our lowest ever fixed rate deal will be available at 9am on Tuesday 19 September.

2nd mortgages

We’re making the following changes to our residential product range at 9am on Friday 8 September.

2nd mortgages

We’re making changes to our residential product range on the 18 August.

2nd mortgages

Potential reduction due to over £35 billion worth of mortgages due to mature in Autumn.

2nd mortgages

We’ll pay the full amount of the standard valuation charge for all residential borrowers choosing a product with a free standard valuation.

2nd mortgages

We’re making 25 cuts across our residential range on the 04 August.

2nd mortgages

Since the start of 2017 on average 80% of its remortgage customers have opted for free legal assistance.

2nd mortgages

We’re making changes to our residential product range on the 06 July.

2nd mortgages

Despite their potential benefits, offset mortgages only represented 1% of the mortgage market in 2016, down from 5% in 2011.

2nd mortgages

Procuration Fees 30/06/2017

We’re introducing a 0.30% gross proc fee for retained business on residential mortgages from 03 July.

2nd mortgages

We’re making changes to the products in our residential range on Wednesday 28 June.

2nd mortgages

Accord Mortgages has named Andrew Montlake, director at Coreco, the top Twitter influencer within the intermediary market.

2nd mortgages

We’re withdrawing and not replacing products in our residential range at 8pm on Monday 19 June.

2nd mortgages

We’ve completely redesigned the Accord Website from the ground up to provide a better experience.

2nd mortgages

We’re making some of our residential product range better at 9am on Wednesday 31 May.

2nd mortgages

We’re making changes to our residential product range at 9am on Tuesday 23 May.

2nd mortgages

Accord Mortgages is continuing with its welcome box initiative following a positive reception from both brokers and their clients.

2nd mortgages

On the 11th of May we’re increasing we’re increasing rates on 12 of our residential products.

2nd mortgages

We’re increasing rates on 12 of our residential products from 9am on Thursday 4 May.

2nd mortgages

Top links

Top downloads

Latest

This website uses cookies to improve your experience

Information on this site is for use by authorised intermediaries only and should not be relied upon by anyone else.

Accord Mortgages Limited is authorised and regulated by the Financial Conduct Authority. Accord Mortgages Limited is entered in the Financial Services Register under registration number 305936. Buy to Let mortgages for business purposes are not regulated by the Financial Conduct Authority. Accord Mortgages Limited is registered in England No: 2139881. Registered Office: Yorkshire House, Yorkshire Drive, Bradford BD5 8LJ. Accord Mortgages is a registered Trade Mark of Accord Mortgages Limited.

References to ‘YBS Group’ or ‘Yorkshire Group’ refer to Yorkshire Building Society, the trading names under which it operates (Chelsea Building Society, the Chelsea, Norwich Peterborough Building Society, N P and Egg) and its subsidiary companies.

All communications with us may be monitored/recorded to improve the quality of our service and for your protection and security. Calls to 0800 numbers are free of charge from a landline or mobile. Calls to 03 numbers are charged at the same standard network rate as 01 or 02 landline numbers, even when calling from a mobile.

Welcome to Accord

Accord Mortgages is a dedicated intermediary only subsidiary of Yorkshire Building Society, the UK’s 2nd largest mutual Building Society. Please choose an option below.

I am a broker

Welcome to the lender that cares about great service for your clients as much as you do.

I am a customer

If you have an Accord mortgage please use our Existing Customer website. If not, please note that we only lend through brokers.


Lending and eligibity criteria for mortgage products, Accord Mortgages, 2nd mortgages.#2nd #mortgages


Lending Criteria

Quickly find specifics on our criteria.

2nd mortgages

Browse Criteria

Top links

Top downloads

Latest

This website uses cookies to improve your experience

Information on this site is for use by authorised intermediaries only and should not be relied upon by anyone else.

Accord Mortgages Limited is authorised and regulated by the Financial Conduct Authority. Accord Mortgages Limited is entered in the Financial Services Register under registration number 305936. Buy to Let mortgages for business purposes are not regulated by the Financial Conduct Authority. Accord Mortgages Limited is registered in England No: 2139881. Registered Office: Yorkshire House, Yorkshire Drive, Bradford BD5 8LJ. Accord Mortgages is a registered Trade Mark of Accord Mortgages Limited.

References to ‘YBS Group’ or ‘Yorkshire Group’ refer to Yorkshire Building Society, the trading names under which it operates (Chelsea Building Society, the Chelsea, Norwich Peterborough Building Society, N P and Egg) and its subsidiary companies.

All communications with us may be monitored/recorded to improve the quality of our service and for your protection and security. Calls to 0800 numbers are free of charge from a landline or mobile. Calls to 03 numbers are charged at the same standard network rate as 01 or 02 landline numbers, even when calling from a mobile.

Welcome to Accord

Accord Mortgages is a dedicated intermediary only subsidiary of Yorkshire Building Society, the UK’s 2nd largest mutual Building Society. Please choose an option below.

I am a broker

Welcome to the lender that cares about great service for your clients as much as you do.

I am a customer

If you have an Accord mortgage please use our Existing Customer website. If not, please note that we only lend through brokers.


Second Mortgages: Basics, Pros, and Cons, second mortgages.#Second #mortgages


Second Mortgages – Advantages and Disadvantages

Second mortgages

A second mortgage is a loan that lets you borrow against the value of your home. Your home is an asset, and over time, that asset can gain value. Second mortgages, also known as home equity lines of credit (HELOCs) are a way to put that asset towards other projects and goals.

What is a Second Mortgage?

A second mortgage is a loan that uses your home as collateral – similar to a loan you might have used to purchase your home.

The loan is known as a “second” mortgage because your purchase loan is often the first loan that is secured by a lien on your home.

Second mortgages tap into the equity in your home, which you might have built up with monthly payments or through market value increases.

Loans can come in several different forms.

Lump sum: a standard second mortgage is a one-time loan that provides a lump sum of money you can use for whatever you want. With that type of loan, you’ll repay the loan gradually over time, often with fixed monthly payments. With each payment, you pay a portion of the interest costs and a portion of your loan balance (this process is called amortization).

Line of credit: it’s also possible to borrow using a line of credit, or a pool of money that you can draw from. With that type of loan, you don’t ever have to take any money – but you have the option to do so if you want to. You’ll get a maximum borrowing limit, and you can continue borrowing (multiple times) until you reach that maximum limit.

Like a credit card, you can even repay and then borrow again.

Rate choices: depending on the type of loan you use (and your preferences), your loan might come with a fixed interest rate that helps you plan your payments for years to come. Variable rate loans are also available and are the norm for lines of credit.

Advantages of Second Mortgages

Loan amount: second mortgages allow you to borrow a large amount. Because the loan is secured against your home (which is generally worth a lot of money), you have access to more than you could get without using your home as collateral. How much can you borrow? It depends on your lender, but you might expect to borrow (counting all of your loans – first and second mortgages) up to 80% of your home’s value.

Interest rates: second mortgages often have lower interest rates than other types of debt. Again, securing the loan with your home helps you because it reduces the risk for your lender. Unlike unsecured personal loans like credit cards, second mortgage interest rates are commonly in the single digits.

Tax benefits: in some cases, you’ll get a deduction for interest paid on a second mortgage. There are numerous technicalities to be aware of, so ask your tax preparer before you start taking deductions. For more information, learn about the mortgage interest deduction.

Disadvantages of Second Mortgages

Of course, life is full of tradeoffs. Be aware of the pitfalls of using a second mortgage. The costs and risks mean that these loans should be used wisely.

Risk of foreclosure: one of the biggest problems with a second mortgage is that you have to put your home on the line.

If you stop making payments, your lender will be able to take your home through foreclosure, which can cause serious problems for you and your family. For that reason, it rarely makes sense to use a second mortgage for “current consumption” costs such as entertainment and regular living expenses – it’s just not sustainable or worth the risk.

Cost: second mortgages, like your purchase loan, can be expensive. You’ll need to pay numerous costs for things like credit checks, appraisals, origination fees, and more. Even if you’re promised a “no closing cost” loan, you’re still paying – you just won’t see those costs transparently.

Interest costs: any time you borrow, you’re paying interest. Second mortgage rates are typically lower than credit card interest rates, but they’re often slightly higher than your first loan’s rate.

Ready to start building wealth? Sign up today to learn how to save for an early retirement, tackle your debt, and grow your net worth.

Second mortgage lenders take more risk than the lender who made your first loan. If you stop making payments, the second mortgage lender won’t get paid unless and until the first lender gets all of their money back.

Common Uses of Second Mortgages

Choose wisely how you use funds from your loan. It’s best to put that money towards something that will improve your net worth (or your home’s value) in the future – because you need to repay that loan.

  • Home improvements are a common choice because the assumption is that you’ll repay the loan when you sell your home with a higher sales price
  • Avoiding private mortgage insurance (PMI) might be possible with a combination of loans – just make sure it makes sense compared to paying – and then canceling – PMI
  • Debt consolidation: you can often get a lower rate, but you might be switching from unsecured loans to a loan that could cost you your house
  • Education: as with other situations, you’re creating a situation where you could face foreclosure. See if standard student loans are a better option

Tips for Getting a Second Mortgage

Shop around and get quotes from at least three different sources. Be sure to include the following in your search:

Get prepared for the process by getting money into the right places and getting your documents ready. This will make the process much easier and less stressful.

Beware of dangerous loan features. Most conventional loans do not have these problems, but it’s worth keeping an eye out for them:


FHA Mortgage, fha mortgages.#Fha #mortgages


fha mortgages

FHA mortgages have always been the alternative to risky subprime mortgages. The underwriting guidelines for FHA mortgages are very flexible and as a result when your personal loan officer takes your applications and tries to approve it they will receive a response from their underwriting system on if you are Approved, Approved with Conditions, or Not approved.

Also no matter what your score you can get the same rate as someone with excellent credit who also applies for an FHA loan which means no matter what your credit grade you will be saving money.

Being approved with conditions can be as simple as making one of your credit cards current, or maybe a line of credit is still reporting after being closed. There can be a multitude of reasons and the situation is different for everyone. This is essentially your path to homeownership. Your loan officer will inform you on the conditions and it is up to you to meet them.

FHA has released guidelines on credit scores – with a 580 score considered to the be the minimum for approval without conditions. You can still get approved for a mortgage below 580 down to a 500 score but you would need to put a much greater downpayment and possibly resolve any issues around federal debt such as student loans that need to be made current before you can enjoy any FHA financing.

It is also important to note that many banks often have their own specific guidelines for FHA products. We try to match you with the best lenders that can help you.

In the lending industry anything below 640 is considered adverse or bad credit. Since we work with FHA loan officers which have access to these products that lend below 640 we are showing you a path to homeownership even if you have bad credit. There are limits on how bad your credit can be – for anyone below a 500 score there are no options until you can improve your credit.

For more information on how you best get a mortgage with bad credit ask your personal FHA loan officer about your path to homeownership.

Get started Now

Fha mortgages

Fha mortgages Fha mortgages Fha mortgages


FHA Loans – 7 Crucial Facts About FHA Loans, fha mortgages.#Fha #mortgages


7 crucial facts about FHA loans

Fha mortgages

Christian Science Monitor/Getty Images

What is an FHA loan?

Less rigorous lending standards and lower down-payment requirements make FHA loans popular with mortgage borrowers.

An FHA loan is a mortgage insured by the Federal Housing Administration. Borrowers with FHA loans pay for mortgage insurance, which protects the lender from a loss if the borrower defaults on the loan.

Why people get FHA loans

Because of that insurance, lenders can — and do — offer FHA loans at attractive interest rates and with less stringent and more flexible qualification requirements. The FHA is an agency within the U.S. Department of Housing and Urban Development.

Here are seven facts that borrowers should know about FHA loans.

Fha mortgages

Less-than-perfect credit is OK

Minimum credit scores for FHA loans depend on the type of loan the borrower needs. To get a mortgage with a down payment as low as 3.5 percent, the borrower needs a credit score of 580 or higher.

Those with credit scores between 500 and 579 must make down payments of at least 10 percent.

Know your credit score before you borrow. Check it today for free at myBankrate.

People with credit scores under 500 generally are ineligible for FHA loans. The FHA will make allowances under certain circumstances for applicants who have what it calls “nontraditional credit history or insufficient credit” if they meet requirements. Ask your FHA lender or an FHA loan specialist if you qualify.

Fha mortgages

Eric Audras/Getty Images

Minimum down payment is 3.5 percent

For most borrowers, the FHA requires a down payment of just 3.5 percent of the purchase price of the home. That’s a “huge attraction,” says Dennis Geist, senior adviser at Treliant Risk Advisors and formerly a vice president of government programs for another lender. In late 2014, Fannie Mae and Freddie Mac reduced minimum down payments to 3 percent from 10 percent, but such loans have limited availability.

FHA borrowers can use their own savings to make the down payment. But other allowed sources of cash include a gift from a family member or a grant from a state or local government down-payment assistance program.

Ready for a mortgage with a low down payment? Search now for an FHA loan.

Fha mortgages

Closing costs may be covered

The FHA allows home sellers, builders and lenders to pay some of the borrower’s closing costs, such as an appraisal, credit report or title expenses. For example, a builder might offer to pay closing costs as an incentive for the borrower to buy a new home.

Lenders typically charge a higher interest rate on the loan if they agree to pay closing costs. Borrowers can compare loan estimates from competing lenders to figure out which option makes the most sense.

Fha mortgages

/ JGI/Jamie Grill/Getty Images

Lender must be FHA-approved

Because the FHA is not a lender, but rather an insurer, borrowers need to get their loan through an FHA-approved lender (as opposed to directly from the FHA). Not all FHA-approved lenders offer the same interest rate and costs — even on the same FHA loan.

Costs, services and underwriting standards will vary among lenders or mortgage brokers, so it’s important for borrowers to shop around.

Fha mortgages

Jakub Krechowicz / Fotolia

Two-part mortgage insurance

Two mortgage insurance premiums are required on all FHA loans: The upfront premium is 1.75 percent of the loan amount — $1,750 for a $100,000 loan. This upfront premium is paid when the borrower gets the loan. It can be financed as part of the loan amount.

The second is called the annual premium, although it is paid monthly. It varies based on the length of the loan, the loan amount and the initial loan-to-value ratio, or LTV. The following premiums are for loans of $625,500 or less.

Annual premiums for FHA loans

  • 30-year loan, down payment (or equity) of less than 5 percent: 0.85 percent
  • 30-year loan, down payment (or equity) of 5 percent or more: 0.80 percent
  • 15-year loan, down payment (or equity) of less than 10 percent: 0.70 percent
  • 15-year loan, down payment (or equity) of 10 percent or more: 0.45 percent

Fha mortgages

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You can borrow cash for repairs

The FHA has a special loan product for borrowers who need extra cash to make repairs to their homes. The chief advantage of this type of loan, called a 203(k), is that the loan amount is not based on the current appraised value of the home, but on the projected value after the repairs are completed.

A so-called “streamlined” 203(k) allows the borrower to finance up to $35,000 for nonstructural repairs, such as painting and replacing cabinets or fixtures.

Fha mortgages

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Financial hardship relief allowed

Of course, FHA insurance isn’t supposed to be an easy out for borrowers who are unhappy about their mortgage payments.

But loan servicers can offer some relief to borrowers who have an FHA-insured loan, have suffered a serious financial hardship or are struggling to make their payments. That relief might be in the form of a temporary period of forbearance, a loan modification that would lower the interest rate or extend the payback period or a deferral of part of the loan balance at no interest.


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