FHA and VA loans may be an immediate alternative for those who don’t have 20% to put down and want to have a low-money-down payment option to buy a house. Let’s say, hypothetically, the conventional rate today is at 7%. The FHA rate in comparison is probably going to be 6.5% or lower, depending upon the market. For Police Mortgage, it’s more about trying to create strategies for people to find a way to get them into a home at lower interest rates, which equals cheaper payments.
Just as important, FHA recently lowered their overall mortgage insurance rates. So, as a result, they have made the mortgage insurance component more competitive. That directly competes against conventional private mortgage insurance.
FHA has MIP, which stands for Mortgage Insurance Premium. Conventional mortgages have PMI, Private Mortgage Insurance.
If borrowers are putting 20% down, a conventional loan would be their best option, but if they’re looking for low down-payment options, FHA and VA are often more competitive than conventional. When it comes to making home loans for law enforcement, it’s about finding the best police mortgage rates and making the payments as comfortable as possible.
For example, if someone is trying to make a $200,000 home purchase, and it’s a 5% down situation, the client can go either FHA or conventional at that point. That’s if they only have $10,000 to put down in this scenario.
If this individual is a veteran or an active reservist there is an additional option in the form of a VA loan. We will get into that in a bit. For now, know that we at Police Mortgage are experts on this option. We answer questions like “How long is a VA preapproval good for?” and many others like that all the time.
Going back to FHA loans, the biggest bonus is the newly competitive mortgage insurance premium rates, and the better current offerings on interest rates. The FHA option certainly has certain costs to it that a conventional loan doesn’t have but today in 2024 the benefits outweigh the costs in many situations.
So, we’re giving our police officer credit union members a couple of different options right now. When there is 20% to put down we will likely recommend a conventional loan. The rate is probably going to be a half point or better below market rates for a conventional 30-year fixed rate program. If 20% down isn’t possible, more times than not we will recommend an FHA transaction. That FHA interest rate is usually about a half point below market.
Obviously if the member is a veteran, then we’re talking about a VA loan where there is no money down and no mortgage insurance.
When borrowers are applying with Police Mortgage, they don’t need to have a decision made on loan type. We’ll explain all of the possible rate-saving options and let the decision be theirs.
As we continue to say, it’s not “push button get mortgage” with us. Each and every situation is different. The best thing you can do is to have a conversation with us and let us know what is most important to you.
Police Mortgage specializes in conventional mortgages, purchase money transactions, FHA loans, and VA loans. Led by founder and CEO John Aretos, Police Mortgage is known and respected for providing clients with exceptional service, customized terms, quick and easy closings, and low money down options. To learn more about Police Mortgage, call 312-499-8878.
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