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FHA or FHA Plus loan

A few months ago I went to a bank to see what I would have to do as far as getting my stuff together to get a FHA loan to buy my first house. My credit was better than I expected, and was told in order for me to get a grant I just need to save up the 1% and come back. Well that time has come and I am ready. For some reason that bank did not have anything in the system regarding when they preapproved me. I had found a house, found a realtor, did everything I was supposed to do, but I had lost the pre approved letter they sent me because it has been a few months. I got my realtor to call the bank to get another one. Well, there was nothing in the system about me in there. My realtor thought that was kind of weird how they didn't have anything in there about me anymore. This was on a Sunday and banks were closed but my realtor got ahold of someone she knew at another bank, so I called them, got pre approved, got a letter, etc. The first bank was just a FHA loan, but this bank wants to do a FHA Plus loan. I am not familiar with the difference in the two. The price of the house is $128,500 and I am putting $1,500 down to get the grant. The seller is paying closing costs, so is there really a need for the FHA Plus loan? I thought that was for people who needed extra money down? My credit score is 722. I know I can ask these questions to the bank who is doing the loan, but I wanted other opinions(someone who wasn't just trying to get my money and give me a loan if you know what I mean). The interest rate is 4.5%. Any other information you need to help me more just ask. This is all new to me.

  • January 24 2014 - US
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Answers (2)

With your current score, I wouldn't recommend FHA, however, it is an option. If you have limited funds for down payment and closing cost, then FHA might have some better solutions currently, however, it's not a loan to keep over time. You will want to refinance to a conventional loan asap. 

 The FHA Plus loan is:  VHDA-financed FHA-insured home loan includes a second mortgage designed to help qualified borrowers who need down payment and closing costs assistance.
 
I can offer a better rate and better options to fit your needs. Contact me for help.

Thanks.
  • January 26 2014
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I am guessing that the "plus' loan is some sort of state bond loan.  If you have the 3.5% to put down then just go with the regular FHA loan.  At that credit score the FHA rate should be in the 4.0% range if the seller is covering the closing costs and you do not need a large lender credit.  Feel free to contact me through my profile if you have additional questions
  • January 25 2014
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