QUAD CITIES REAL ESTATE WITH RE/MAX

SERVING THE ENTIRE IOWA AND ILLINOIS QUAD CITIES ............................................................

DAVENPORT - BETTENDORF - ROCK ISLAND - MOLINE AND SURROUNDING COMMUNITIES

TOM & CYNDEE BROWNER - CRS, ABR, GRI

BROKER ASSOCIATES SERVING IOWA & ILLINOIS - 319-332-9900 EXT 225

Call us on our private line at 332-1130 - RE/MAX RIVER CITIES, or Contact us at tom&cyndee@quadcitiesrealestate.com Have a real estate question? The answer is just a phone call or E-mail away. Buying or Selling a home is an important financial decision. WHEN YOUR MONEY MATTERS, be careful and check out who you are dealing with. You deserve the best information and service available. If you would like to know what you should expect, check out our Buyer Representation or Seller Representation pages.

FHA - FEDERAL HOUSING AUTHORITY

This is a Federal program to insure loans for banks that they might not otherwise choose to take. FHA buyers usually have less money, less time on the job, poorer credit and in general, are greater risk to the bank.

As a rule, the loan guidelines are slightly higher on the home because they are easier on the buyer. The FHA appraisal not only guarantees that the value being offered is in the home, but that the roof, furnace, grading, foundation, etc. are a little better than just being there. This is because FHA realizes that if the buyer did not have a good down payment, that they also probably do not have the money to put in a new furnace or put on a new roof right away. So the property guidelines are a little more stringent on the home.

FHA allows buyers to purchase with only 3% down if the home is under $50,000. If the home is above $50,000, the buyer only puts down 3% of the first $25,000 and 5% down from $25001 to purchase price. FHA allows you to borrow most closing cost and add these cost to the amount to the principle being borrowed.

As in everything, there are no free rides. Since The Federal government is insuring the loans, they also set the interest rates. Often the interest rates are 1/4% higher than conventional rates to encourage banks to take these loans. Also because as a mortgage pool, there are more problems with FHA buyers than Conventional Buyers, the Federal government allows the banks to add .034% of the principle to the principle as mortgage insurance. Part of this may be refundable if you apply for a refund because you have sold the home within the first seven years. The bank is also allowed to take another .005% of principle as mortgage insurance per year. This amount is divided by 12 months and is part of your monthly investment. Unlike Conventional loans, Private Mortgage Insurance with FHA last as long as the loan is in place.

Poor Credit, one year clean can put you in a home with FHA. Bankruptcy, two years clean after final execution of the bankruptcy can put you in a home with FHA. History of lay offs, shorter time on job or judgements in your credit history. With a good letter of explanation and reasonable cause, you may be able to go FHA and get a home. With home prices raising and interest rates going up too, waiting might cost you a lot more than the small penalties included with FHA. Let's say that a FHA payment is $12 a month higher to go now, but you get the house now. Is this not better than waiting another year and finding the home went up $8000 and you can't afford it anymore or couldn't save more and still have to go FHA. Another benefit is that FHA loans will work with other first time buyer programs.

Finally, FHA allows you to have a higher debt to income ratio, 41% versus a conventional 36 to 38%. This allows you to purchase more home now and lock in today's lower interest rates. See Buyer Self Qualification

CURRENT FHA LIMIT TO PRICE OF A HOME IN THE QUAD CITIES

Scott, Muscatine, Johnson, Clinton Counties

Single Family Housing ---------------------------------- $109,032.00 -------------------------------------------------------------------- Duplex - 2 Family Housing ----------------------------- $139,512.00 ------------------------------------------------------------------- Tri-plex - 3 Family Housing ---------------------------- $168,624.00 ------------------------------------------------------------------- Quad-plex - 4 Family Housing ------------------------- $209,568.00 -------------------------------------------------------------------

CLOSING COST ALLOWED TO BE BORROWED -------------------------------------------------------------- Home Purchase Price ---$ 10,000 - $ 12,099 ----- Amount of Closing Cost that Can Be Borrowed--------- $ 500 ------ Home Purchase Price ---$ 13,000 - $ 16,099 ----- Amount of Closing Cost that Can Be Borrowed----------$ 550 ------ Home Purchase Price ---$ 17,000 - $ 21,099 ----- Amount of Closing Cost that Can Be Borrowed--------- $ 600 ------ Home Purchase Price ---$ 22,000 - $ 26,099 ----- Amount of Closing Cost that Can Be Borrowed--------- $ 650 ------ Home Purchase Price -- $ 27,000 - $ 30,099 ----- Amount of Closing Cost that Can Be Borrowed--------- $ 700 ------ Home Purchase Price ---$ 31,000 - $ 35,099 ----- Amount of Closing Cost that Can Be Borrowed--------- $ 750 ------ Home Purchase Price ---$ 36,000 - $ 40,099 ----- Amount of Closing Cost that Can Be Borrowed--------- $ 800 ------ Home Purchase Price ---$ 41,000 - $ 44,099 ----- Amount of Closing Cost that Can Be Borrowed--------- $ 850 ------ Home Purchase Price ---$ 45,000 - $ 49,099 ----- Amount of Closing Cost that Can Be Borrowed--------- $ 900 ------ Home Purchase Price ---$ 50,000 - $ 12,000 ----- Amount of Closing Cost that Can Be Borrowed--------- $ 950 ------ Home Purchase Price ---$ 55,000 - $ 12,000 ----- Amount of Closing Cost that Can Be Borrowed----------$1000------ Home Purchase Price ---$ 60,000 - $ 12,000 ----- Amount of Closing Cost that Can Be Borrowed----------$1050 ---- Home Purchase Price ---$ 64,000 - $ 12,000 ----- Amount of Closing Cost that Can Be Borrowed--------- $1100----- Home Purchase Price ---$ 73,000 - $ 12,000 ----- Amount of Closing Cost that Can Be Borrowed--------- $1150 ---- Home Purchase Price -- $113,000 -$130,000 ----- Amount of Closing Cost that Can Be Borrowed--------- $1200 ------

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