The Benefits of FHA Loans
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More homeowners and buyers are considering Federal Housing Administration (FHA) loans . In these times of economic hardship, the popularity of such loans serve as a way of helping distressed homeowners and buyers to get an affordable mortgage.
Conventional loans are hard to keep up with. When interest rates soar, you can expect to have higher mortgage payments. And with the still ailing economy responsible for the high unemployment rate, keeping up with mortgage payments is a challenge.
Homeowners and buyers have benefited a lot from FHA loans. This, however, doesnt make or guarantee loans; it insures loans. The insurance provided by the loan removes or minimizes the default risk lenders face when buyers put down 20 percent.
In laymans terms, an FHA loan will up your chances of getting approved for a loan because lenders dont have to worry about you defaulting on your mortgage. If you fail to keep up with payments, the lenders are secured from taking a loss because FHA loans have already insured them.
Without further approval from FHA, its approved lenders are authorized to do the following: - Take loan applications - Process loan applications - Underwrite and close the loan
Why is there a need to switch to FHA loan? There are a lot of reasons, actually. Here are some of them:
1. You may qualify for an FHA loan even though you dont have a perfect credit score.
2. Those who have had bankruptcy or foreclosure can still take advantage of refinancing FHA home mortgage loan.
3. There is no minimum credit score requirement. Your credit history is evaluated specifically by your loan officer.
4. The US government insures lenders who make the FHA loan with competitive rates
5. Your mortgage payment can be as much as 65 percent of your gross monthly income.
6. Up to 97 percent of your homes value can be finance.
7. You can switch into a 30 year fixed loan easily by converting to an FHA refinance loan.
8. Switching from an adjustable rate mortgage to a fixed rate loan is made easy.
9. Refinancing your FHA home mortgage loan can allow you to consolidate first and second mortgages. 10. The closing costs are regulated by the FHA and are often lower than the cost associated with other lenders.
If you are a first time homebuyer or planning to refinance your home, the best choice is to go for FHA loans. Every one has a shot at being qualified. There are no borrowers restrictions with regard to income limits, affordable down payments, and relaxed underwriting standards.
Article Source: Articlelogy.com
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