Legislation changes are in action to modernize the FHA Home Loan Program. Low to middle-income families can take advantage of an FHA Loan as a flexible financing option on their home purchase. Visit Mortgage Loan Place for more FHA information, including expert articles and tools.
What makes FHA loans more desirable than traditional lender mortgages?
People have been using FHA loans to purchase homes in the United States since 1934. The FHA makes it easier for families to enjoy the benefits of home ownership due to special terms and benefits you can receive as a result of using an FHA guaranteed loan to purchase your home. However, many people are not familiar with FHA loans and as a result may wonder, what are the advantages to obtaining an FHA loan instead of a loan from a traditional lender?
Traditional lenders have specific requirements for loan approval just like the FHA, however, some of the benefits of purchasing a home with an FHA loan include:
No down payment. FHA loans do not require a down payment. This way it is easier for families to purchase a home who will have no problem making the mortgage payment, but with a traditional lender these same families may have to wait for years in order to save the required down payment in order to qualify for a loan.
The FHA accepts gift funds for the down payment of a home. Many traditional lenders do not allow the down payment for a home to come from another source. The FHA allows down payment money to be given to the buyer from relatives, friends, employers, and gift down payment organizations such as Ameridream in order for families to have an easier time coming up with a down payment for their home.
It is easier to qualify for an FHA mortgage loan than with a traditional lender. The FHA has certain requirements, but they are more lenient with buyers because the FHA is guaranteeing a percentage of the loan which makes it easier to qualify for a mortgage than if you were applying with no guarantee.
The terms are more favorable with an FHA loan. Usually FHA mortgage loans have some of the lowest interest rates available on fixed rate loans. This translates into overall savings for the buyer who will pay less money for their home than if they had obtained a mortgage with a traditional lender.
FHA mortgage loans have lower costs for obtaining a mortgage. The FHA only allows certain fees to be charged by their approved lenders, and there is usually a cap for how high theses fees can be. Many lenders charge more fees and higher closing loan costs than FHA lenders, so people financing their home with an FHA loan usually save a lot of money on fees and closing costs.
Your credit does not have to be perfect to get an FHA mortgage loan. Because of the guarantee of an FHA loan credit requirements are less strict and you can qualify for an FHA loan even if you have had to declare bankruptcy in the past.
The FHA stays with you through the lifetime of your mortgage loan and helps you with mortgage problems if they arise. Sometimes unexpected circumstances cause a family to miss a mortgage payment and go into default with their home loan. The FHA will work with your mortgage lender to help you get back on track and make arrangements to repay the lost payment and keep your home.
If you are considering purchasing a home you should look at all of the benefits an FHA loan has to offer and choose wisely when deciding on a mortgage lender. For more information on FHA loans and approved lenders go to the HUD.
