What Is a FHA Loan?
This loan is meant to help people in dire financial conditions when they want to buy a new home. The mortgage is excellent for people trying to buy a house for the first time, but they need help to do it themselves, so they visit page of mortgage brokers online to help them. It is better to do so, to save a lot of time!
When you intend to get a house, you get to pick between two different types of mortgages. One is government-backed, while the other mortgage is conventional.
Conventional Mortgage: It is not backed by the government and is more difficult to take.
Government Mortgage: Backed by a federal agency and gives you compensation if you default on the mortgage payments.
Benefits of Getting a FHA Loan
There are a lot of different things that you should bear in mind when you think about getting an FHA loan. If you need clarification, you should get a mortgage broker to solve the issue!
Here we have different benefits that can help you out when dealing with FHA loans.
Qualification
It is easier to obtain! There are different requirements to get an FHA loan, and there is also more leniency compared to other loans regarding credit and payment terms.
Less Downpayment
You do not need a significant downpayment to own a house when handling FHA loans. You can pay about 3.5% interest for your home loan with a high FICO score.
Credit Rating
To get the low downpayment, you need to meet the minimum credit rating for your FICO score required for your lender. The score will depend on each different lender, but the FHA score requirements are also lower compared to other loan requirements, including conventional loans.
If the credit rating is less than the minimum score, you might still be able to get an FHA loan, but the interest rate might shoot up to 10%.
You must meet the credit score to qualify and get your desired house.
Housing Options
You can get an FHA loan on different properties, including a house for one family, a place meant for multi-families, or a manufactured home.
However, you can only use the FHA loan to get a home as a primary residence. To adequately finance the house if it is for investment, you should get a different loan financing.
Option for Refinancing
Remember that you need to pay insurance premiums for your house with an FHA loan. However, even if you wish to get an FHA loan, it is also possible to get another loan for refinancing. If the score is high enough, the lender will help you switch from the FHA loan right to a normal conventional one.
If you want a conventional house mortgage with less equity, it will stop increasing once it hits 22%. After that, you no longer need to pay insurance for the mortgage.
Takeaway
Now that you know everything about the benefits of getting an FHA loan, get a loan for yourself today!