Is an FHA loan ever a good idea for veterans?

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Hey everybody it’s eric it’s another wonderful red friday what do i mean by red friday well if this is the first time you’ve watched our videos on fridays all of our employees here at low voice wear something red normally swag like this red stands for remember everyone deployed essentially it’s our way of saying we support the military we love the united states

Of america we’re patriotic we wear red on friday speaking of red down here to the right there should be a red button that says subscribe if you’re watching this on youtube please become a subscriber so that you can get all of our videos as soon as they come out um let’s talk today about fha loans okay now you might be thinking wait a second why is low va rates

Talking about fha loans we actually have the domain low fha rates but we can talk about that at another time it’s actually low fha loan rates we do fha loans but what i want to talk today is is whether or not a veteran should get an fha loan even if they qualify for a va loan has that ever happened i’m sure it has so let’s talk about the benefits of fha versus

Va maybe some of the benefits and some of the differences when you’re comparing these two loan programs va loans are going to come out ahead in almost every single category so you can see i’m a bit biased hence low va rates we’re gonna win most of the time over here let’s talk about down payments okay nobody likes to make down payments that’s hard-earned cash

That’s sitting in your bank it’s great to log into your online bank account and see you know thirty thousand dollar balance you wanna keep your money va loans do not require any down payments fha they do fha so we’re going to put va no fha is three and a half percent so you know on a hundred thousand dollar loan that’s 3 500 that starts to add up your 7 000

For a 200 000 loan so you’re gonna have to put money down let’s talk about loan limits okay loan limits not something we run into a ton here at low va rates because loan limits have gone up over time but there still are limits and you are limited on how much you can borrow with an fha loan depending on where you’re living in the country you might not be able

To get the house you want with an fha loan here’s the great news in 2020 va loan limits were taken away okay the va no longer has loan limits and we have a whole bunch of videos on that so please watch once again fha fha yes it has limits va no limits you can borrow as much as you want on a vlone assuming you qualify for it let’s talk about credit scores okay

We have always told you on va loans that on a va loan there is no minimum credit score guess what fha loans do have minimum fico scores or minimum credit scores yeah it’s super low but it’s still there so fha losing some space here they have credit score requirements va does not okay so like i said over here on va loans there are no loan limits keep in mind

Due to the coronavirus it’s kind of shook things up a little bit life is just about the same currently with chronovirus and at low va rates we do have some minimum va fico scores that we’ve talked about in other videos but those should not be around a whole lot longer okay number two for the time being many fha lenders are requiring fico scores of like a 660.

That’s a pretty good score here at low view rates we are now going all the way down to 580. so this is just a little segment in time under coronavirus even though the written rule va loans do not have any minimum fico score fha do even today in this new world va fico score requirements at low va rates are much more lenient than fha very important to understand

I know we’re talking a lot about fico scores today but keep in keep in mind even when things get back to normal which hey i’m hoping is very very soon fha loans when you have a fico score between like 500 and 579 you’ve got to put 10 percent down so this down payment goes way up if you’ve got you know if you’ve got some rough credit if you want to utilize the

Fha’s three and a half percent down payment you’re gonna have to have a 580 fico score in a normal world okay so again va loans went on down payment va loan va loans win on loan limits and they went on credit scores let’s talk about mortgage insurance fha loans require 1.75 in mortgage insurance and that’s a fee that you’re going to pay up front when you get

Your loan okay and then you’re going to pay in addition to that anywhere from .45 to to 1.05 percent in your monthly mortgage insurance so fha loans have a upfront pretty high mortgage insurance premium they also have a monthly mortgage insurance premium and it doesn’t go away even when you reach 20 equity in your house like it does on a conventional loan that

Fha mortgage insurance fha mortgage insurance that’s there forever until you get out of that fha loan now the va has never had any kind of mortgage insurance not up front and not monthly they do have a funding fee i don’t want to mislead you the va’s i guess the va’s what’s the word i’m looking for example of mortgage insurance or their replacement for mortgage

Insurance is the va funding fee we’ve got lots of videos out there about the va funding fee but you’re never paying that monthly it’s waived if you’re a disabled veteran and look it’s super super low when you’re refinancing and that’s what we’re talking about right now because interest rates are so extremely low let’s talk about streamlines i’m gonna get some

Space here on my whiteboard i always forget i have this nice eraser let’s talk about streamlined loans we do lots of those here if you’re a veteran you’re getting a mailbox full of streamline options and you’ve been hearing lots about streamlines fha has a streamline okay and there’s a pretty good option there it’s uh really really good for people who already

Have an fha loan in fact it’s very similar to the va streamline that we talk about all the times very similar requirements very similar benefits so i don’t want you to get confused even though i’m saying the fha streamline is very similar to the va and there’s a lot of benefits if you don’t have an fha loan you can’t do an fha streamline same way if you don’t

Have a va loan you can’t do a va streamline okay so we have veterans sometimes that call and they say hey i got this fha streamlined mailer in the mail should i do an fha streamline we start talking to them we realize well you’re a veteran you have a va loan let’s go ahead and just give you a va refinance since interest rates are so low right now we’re talking

A ton about streamlined loans fha streamline va streamline there’s even a usda streamline not going to talk a ton about that right now but all a streamlined loan is is it allows someone who’s currently in a government loan fha va usda when interest rates go down and they have gone way down guys it’s a quick and easy way hence the word streamline okay it’s a

Quick and easy way to get a lower interest rate and to improve your situation so i want to talk first about the similarities between fh and va streamlines probably the biggest similarity reduced paperwork guys there’s almo you know little paperwork hence the streamline fha or va you don’t have to send in w2s and tax returns there’s no appraisal i guess i could

Put that up here no appraisal needed always in the mortgage world you put little asterisks you might need an appraisal if you’re doing an adjustable rate mortgage with a va streamline we’re not going to talk about that today because you don’t have to that’s a choice no appraisal needed little paperwork biggest reason people are streamlining fha and va loans

Right now lower rates okay and rates are super low even if you just refinanced months ago give us a call interest rates are likely lower today than they were the last time you refinanced lower rates mean what lower payments both loans allow you to take a lower rate and the lower payment you can even lower your term other similarities we’ve talked about this

In some of our videos um there’s got to be benefit if you’re lowering your rate but there’s tons of closing costs va is not cool with that you’ve got to recoup your closing costs on a va loan within 36 months fha loans go a step further it’s accomplishing the same goal and that is not taking advantage of people with a super high cost and minimal savings on fha

Streamlines it’s not necessarily recouping your closing costs in 36 months you’re not even allowed to have new closing costs rolled into the loan asterix we’ll talk about that in an fha only video but we almost never see the loan amount increase higher than what it was when you got your home on fha so both fha and va are trying to reduce the amount of costs that

Can be rolled into your loan um one more similarity before i get to the differences seasoning requirements you can’t just go do a streamline with va or fha if you just got your mortgage two months ago or if you just refinanced three months ago easiest thing to remember six payments both fha and va loans require that you’ve made six payments over a six month

Period before you can take advantage of the streamline so the most streamlines you could do in any given year would be what two and it’s even a little bit harder to do two it’d be like two every eight months based on how the mortgage calendars work we’ll talk to you about that when you call us up let’s talk about the differences just to finish up today we like

To keep these red friday videos a little shorter the difference is look on an fha loan you’re going to pay monthly mortgage insurance fha has insurance monthly and you’re going to pay that every single month for as long as you’re in the loan that reduces your savings a va streamline no monthly insurance you will pay the funding fee but it’s super small it’s

Only 0.5 percent va funding fee when you’re doing a va refinance uh the only other thing i could say that makes the va loan in my opinion a better streamline i was just talking about how both va and fha want to make sure you’re you’re recouping those closing costs as quickly as possible on va loans you’re allowed to pay discount points okay to buy down the

Rate on fha loans you’re not seeing a two and a quarter percent rate yeah i said it two and a quarter 30-year percent 30-year percent two and a quarter 30-year fixed apr somewhere probably around 2.59 not quoting rates today just as an example we have veterans getting a two and a quarter 30 year fixed right now in this market you’re not going to see that on

Fha because fha restricts your ability to pay discount points because of how the rules are sub so moral of the story both the fha and the va streamline are amazing refinance products we prefer the va loan here if you’re a veteran and you have a va loan look at the va streamline as a way to get all sorts of money back in your pockets because rates are super low

Right now thanks for watching make sure you wear red every friday we’ll see you next week

Transcribed from video
Is an FHA loan ever a good idea for veterans? By Low VA Rates