When you buy a home using a mortgage, an escrow account is usually set up by your lender in order to help manage your property tax and insurance costs. Rather than having to save up and pay these bills separately, part of your mortgage payment is deposited into the escrow account every month. When your insurance premiums and taxes are due, they can be paid via the escrow account. Normally, your lender will use the funds in the escrow account to pay these bills on your behalf.
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With an FHA loan, home buyers can take advantage of low minimum down payments, lenient credit score requirements and flexibility when it comes to rate and term structure. But FHA loans may not be the ideal home financing solution for everyone. In today’s post, we’ll review FHA mortgages and their benefits, as well as potential drawbacks. What is an FHA Loan and what are its benefits? FHA loans are government-backed mortgages designed to help the average American purchase a home with affordable terms. They feature low down payments (typically 3.5%) and allow gift funds to be used toward the down
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UPDATE, 1/21/2017 – The Trump Administration has indefinitely suspended the pending rate cut for mortgage insurance required for FHA-backed loans. ************************************************************************************************** According to an official announcement from the Federal Housing Administration (FHA), the annual premiums most borrowers have to pay on FHA loans will be slashed, saving new FHA-insured homeowners an average of $500 in 2017. According to a January 9 press release, the FHA is reducing its annual mortgage insurance premium (MIP) by 25 basis points (a quarter of a percent) for most new mortgages with a closing/disbursement date on or after January 27, 2017.
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