What can I group into an FHA loan

Question

Hey everyone,

So I'm looking into house hacking in Orange county and I have a few questions.

1) Can I bundle the closing cost into an FHA loan? I life in an expensive market living in Orange county and after looking into it, closing cost was a little more than I anticipated and I was wondering if I can including the closing cost as part of my loan.

2) Can I do the same with the upfront mortgage insurance payment?

The end goal would be to refinance out of the FHA loan after a few years.

3) What point in the process do I start the process with the bank once I have found a property that I like, or is it best to include said bank at the very beginning?

4) Lastly, for a property inspector, where in the process do I include an inspector before closing on a deal? Is it when I'm looking at the property or is it after the purchase process starts and the deal is contingent on an inspector?

Hope everyone is having a great week and is staying safe!

Jaysen Medhurst · Answer

@Brock Pellerin, full disclosure: I work for a big bank.

I don't think it really matters, they're all working with the same FHA guidelines. I think there are a few things to keep in mind:

• Relationships: leverage the ones you have and think about the ones you want in the future.
• Generally, local/regional banks and CUs are more likely to be portfolio lenders, which can be beneficial.
• Local banks/CUs will probably have more flexibility and you're more likely to be able to actually interact with decision makers.
• Big banks will probably have much better technology and offer more services.

I've seen conventional loans with down payments as low as 3%.

Brock Pellerin · Answer

@Curt Davis - Thanks, I will definitely take note of that.

@Jaysen Medhurst - Do you typically lean towards credit unions or big banks for FHA loans? Also, going the conventional route, how low can typically go? 10%? down?

Jaysen Medhurst · Answer

@Brock Pellerin, up-front PMI and some closing costs can be bundled in. I don't think you can bundle in things like inspection and appraisal, but worth asking your lender.

It's best to start talking with lenders now. Get pre-qualified so that you're ready to strike when you find the right property.

Typically, an inspection occurs after the property is in contract. Yes, an inspection contingency should be in your contract. Pretty standard.

Additionally, I would recommend looking into a low-down payment conventional loan. Assuming you qualify, this is a much better route than FHA. There is less paperwork, no up-front PMI, and monthly PMI drops once you hit 78-80% LTC.

What can I group into an FHA loan

What can I group into an FHA loan

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