housing loans, who doesn't want their own home? Free from the hassle of the tenant breathing down your neck for payment of rent. The FHA (Federal Housing Administration) has been associated with coming to people’s aid when they felt the need of their own home. People feel that taking housing loans is a way better than living in a rented apartment: at least you will make it yours one day. The main three benefits associated with an FHA Housing Loan are lesser down payments, easy credit qualifying, and decreased closing costs. Read on to find out more about FHA loans and what they comprise.
The FHA itself does not give loans, but they approve lenders to give loans. So if you get competing interest rates from two lenders, it is not FHA policy, they are what they are. FHA-approves lenders provide a wide range of offers and rates. We encourage you to shop around and ask for rates before making any decision.
First Home, Sweet Home
If you are about to buy your first own home ever, FHA housing loans can provide you with great benefits. The FHA loan can allow you with a down payment of minimum 3.5% of the total cost. Most of the closing prices and other fees can be included in the loan; easy, right!? This kind of option is available on one to four unit properties. It is a huge attractive option for first timers.
Pop the Bubble
After the housing bubble collapsed, FHA housing loans have become more important for mortgage borrowers nowadays as they seek to take control of their finances. Banks that already had too many people defaulting on their loans were afraid of people who make down payments of lesser than 20%. FHA came at this point and filled the gap.
Borrowers who use the FHA loan have to pay mortgage insurance so that the lender is safe and sound in case the buyer defaults on the housing loan. Since this added security is associated with FHA loans, lenders are all the most happy to offer you attractive interest rates and flexibility in their demands.
Credit Score Crucifix
The credit score qualification? FHA doesn't order it. The context matters per borrower. So if you have applied for bankruptcy and still look like an attractive investment, the FHA may take you up on the offer for a housing loan. However, some lenders may still need the surety of your credit score; so talk to your lender about their demands.
Your Closing Costs May Be Covered…?
Yes it’s true. Some lenders are willing to waive some fee or pay your closing costs in order to induce you into the offer. Think of it as similar to a bonus offer that you might find in other contexts. But, they then charge you a higher interest rate. So, evaluate wisely!
If your house needs repairs direly, FHA has a specialized product just for you. This special loan is for borrowers who are in need of additional cash to restore their home. This type of loan is known as a 203(k). The major advantage is that the loan amount is not based on current value of your house, but the future value of your house after the repairs are done.
Want to know more about FHA housing loans? You can find more details here. If you’re not sure about which home mortgage loan you should choose then have a look at our recent article on this topic.