FHA Financing has been a miracle for many people in Southern California because it’s made it possible for them to buy homes especially if they have low FICO scores, or less than 20% for a down payment, but as fantastic as FHA loans are they do come with several disadvantages that you should know about including the following.
You Will Need Private Mortgage Insurance (PMI)
When you get FHA financing you will also need to get Private Mortgage Insurance as well. PMI is an insurance policy that protects the lender if you stop making payments on your mortgage loan.
Private Mortgage Insurance can also be expensive and cost up to $400 per month so it’s best to factor in this cost into your monthly budget just so you know that you will be able to continue making all of your payments once you’ve been pre-approved for an FHA mortgage loan.
You Won’t Be Able To Purchase 50% To 75% of Condos in SoCal
Did you know that in Southern California the average home purchase is between $250,000 to $500,000 and most of the homes that are bought here are condos?
What most buyers don’t know is that in Orange County only 40% to 50% of condos here have been approved for FHA financing, while in Los Angeles County just 25% have been approved for FHA
financing, so if you’ve been pre-approved for an FHA loan that means you won’t be able to purchase up to 75% of condos here unless you’ve been pre-approved for a conventional mortgage loan.
To learn more about FHA loans, or to view homes for sale in Southern California, contact Fred Sed Realty today by calling us at (800) 921-9231 or connect with us online.
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