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FHA Mortgages 101: An Interview with Jeff Seidman of East Coast Mortgage and Financial Services

By Jeff Seidman

Tell us a little bit about your company and the services you offer.

East Coast Mortgage and Financial Services, Inc. NMLS #12024 is a family owned business in operation since 1994. We are a customer service driven company, licensed in PA, DE, NJ, MD, VA, FL, & CA offering conventional, jumbo, FHA, VA & RDA fixed and adjustable rate mortgages for purchase and refinance. We handle primary, secondary, and investment properties. We do Reverse mortgages, and rehab loans.

Can you briefly explain what an FHA home loan is?

An FHA loan is a mortgage loan insured by the Federal Housing Administration. Each FHA loan has a mortgage insurance premium collected that goes into a an account held by the FHA to reimburse lenders for losses they may suffer as the result of a borrower who failed to pay on an FHA loan. This insurance gives lenders the ability to make loans to individuals who might otherwise not qualify for a traditional mortgage.

Who should consider an FHA mortgage and how do people qualify?

There are two reasons to go FHA. The first is cash need to close. FHA requires just 3.5% down, and the seller can pay up to 6% of your closing costs, which in most cases cover 100% of those costs, leaving you needing just the 3.5% down-which can all be a gift from a relative. Although if you are a veteran or live in a designated area serviced by the USDA you may be eligible for 100% financing. The second reason you would go FHA is that your credit score prevents you from getting traditional mortgage insurance, or the lower score makes the rate to high to qualify. To qualify for an FHA loan, or see if you are able to qualify for additional loan programs, we just need about 10 minutes on the phone to collect some information, and to pull a credit report.

What are the basics of the standard 3.5% down payment program?

For our FHA loans we require a minimum middle credit score of 580. Depending on where your score is will determine how much home you can qualify for. The 3.5% down can be gift money, or savings. FHA loans have both upfront and monthly mortgage insurance. The upfront portion which is 1.75% of the loan amount is added to the base loan amount, and not paid in cash by the borrower prior to or at close. The annual mortgage insurance for loans with 3.5% down is 1.35% annually, and is paid to FHA on a monthly basis. Mortgage insurance is currently on FHA loans for the life of the loan, so the only way to get rid of it is to refinance into a different loan when you believe you have 20% equity in the home.

When should people consider applying for the FHA 203k Streamline Rehabilitation home loan?

FHA has two different rehab program loans. For projects with a smaller scope, like under 30k, the 203k streamline is the best bet. For more significant work, or work with larger price tags, eh full 203k loan is the program you should go with

What are HUD-owned properties?

HUD, or the Department of Housing and Urban Development, administers the FHA program. Sometimes HUD forecloses on a borrower, and becomes the owner of the property. They will often sell these homes and below market rates. Sometimes repairs will be required, and certain FHA loans allow for those repairs to be made as part of the mortgage loan.

What are the benefits and requirements of an Energy Efficient Mortgage?

The benefits of adding the cost of energy improvements to your home loan is the potential for significant savings in monthly utility expenses. By financing it in with your mortgage, you get a low rate, and the tax deductibility of mortgage interest.

What's the best way for people to contact you and/or your company?

The best way to contact us is by phone at 800.353.9440 Monday through Friday 9-5 or by email at info@ecmfinancial.com .

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