FHA versus Conventional loan

airforceguySeptember 27, 2009

Hi! have a few questions. Here is our situation:

Own a condo(in Virginia). Our interest rate is currently at 6.25%, conventional 30 yr fixed. Fortunetly we put a lot down on the condo (or maybe not,lol) We paid $325,000, its now worth maybe 270 to 280,000. Still have $240,000 left to pay on it.

Furthermore, we are looking to buy a house in Spring 2010 in Maryland. And rent out our condo. Renting it out should be a piece of cake, were close to a metro, its in very nice shape, upgrades, blah blah,lol! The rent will cover the mortgage, but not the condo fees, insurance or property taxes.

We already have received our pre-approval amount to buy a new home.

Question #1

Whats the difference between a FHA and a conventional loan? (pro's, cons)

Question #2

Is it true that if we refinance our conventional mortgage (on our condo) with another conventional mortgage that we can't get a conventional loan for our new home for a period of one year?

One lender said above was true, another said he had never heard of that situation??

Many thanks

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sylviatexas1

FHA loans have lower down payments, but the mortgage insurance is higher;
FHA adds a set fee to the balance (so you pay principal *& interest* on MI!), plus they charge a monthly fee.

Conventional requires a higher down payment, & they're sometimes stricter on credit, but there's no limit on the number of conventional loans you can have, although a lender would undoubtedly require a larger down payment if you wanted to bu a secondary home or a rental property.

    Bookmark   September 27, 2009 at 2:33PM
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roobear

Seeing that you have airforceguy as your screen name, are you eligible for a VA loan?

    Bookmark   September 27, 2009 at 4:05PM
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airforceguy

Thanks for the responses.

No, I was in the Canadian Air Force. Now reside (citizen) in the USA. Thanks

    Bookmark   September 27, 2009 at 5:35PM
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dave_donhoff

Hi AFG,

Question #1
Whats the difference between a FHA and a conventional loan? (pro's, cons)

FHA requires rather pricey mortgage insurance premiums, where conventional can avoid mortgage insurance.

Question #2
Is it true that if we refinance our conventional mortgage (on our condo) with another conventional mortgage that we can't get a conventional loan for our new home for a period of one year?

Not, not at all... no idea where that came from.

Luck!
Dave Donhoff
Leverage Planner

    Bookmark   September 27, 2009 at 9:04PM
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airforceguy

Thanks all. Not counting anyone out,but I have been a long time lurker and the "Dave Donhoff" name appears over and over,many thanks

    Bookmark   September 27, 2009 at 9:34PM
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