FHA mortgages are keeping the Housing Market alive. FHA now offers interest rates that are lower than conventional financing otherwise known as Fannie Mae. As Fannie Mae and Freddie Mac wind down over the next 6 years FHA will play a larger role in home ownership.
Here are the loan limits that FHA allows for Palm Beach County:
A Single Family Home - $423,750
A Duplex - $542,450
A Tri-Plex - $655,700
A Fourplex - $814,900
Here are some things to keep in mind when getting an FHA mortgage in West Palm Beach:
Assume 3.5% down or 5% down if you are getting a gift from a family member
There is mandatory mortgage insurance, financed in the loan as well as a monthly surcharge. You will have this for at least five years and then you are only elligible to remove it when the mortgage balance on the property gets as low as 78% of the value of the home
Your loan is assumable which is actually a great feature in todays world. So if you want a family member to take over your mortgage 5 years from now, you can approach your servicer and transfer the obligation and the property rights to them
You can finance as much as 6% closing costs which reduces your out of pocket expense. This technique works to a certain extent but it created pressure for the realtor and the appraiser on your deal. (Ask me about this)
FHA rates are currently lower than Fannie Mae rates and there are not a lot of pricing adjustments based on credit score like Fannie Mae/freddie Mac Financing
Here is a graph of home prices in the West Palm Beach area. You can obviously see the declining values but this also means very affordable housing. I created an example of a typical Good Faith Estimate based on the median value of $150,000.
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