During the 1930’s there were a rash of home forrclosures and defaults in the U.S. To provide lenders and mortgage companies with adequate insurance while stimulating the housing market the government created what is known as the current FHA program. That 1930’s FHA program allowed home loans to become accessible and affordable. Nowadays, FHA loans are very popular, especially with first-time home buyers.
What Is an FHA Loan?
Insured by the Federal Housing Administration (FHA) an FHA loan is a mortgage home loan that is insured by the FHA. Our U.S. federal government insures loans for FHA-approved lenders reducing the risk of loss if a borrower defaults on mortgage payments.
Advantages of FHA Loans
Traditionally FHA mortgage loans are easier to qualify for requiring a low down payment (appox. 3.5 percent). You can also have a lower credit score. New home owners who cannot afford the typical down payment of 20 percent or can not get approved for a private insurance should consider an FHA loan as it is the best option for these types of home buyers. FHA loans are also “assumable”, which means if you want to sell your home, the buyer can “assume” the loan you have. Potential home buyers who have low or bad credit, have gone through bankruptcy or have previously been foreclosed on may still qualify for a government insured FHA loan.
Disadvantages of FHA Loans
The catch to FHA loans: FHA loans do not have the hard standards of a conventional loan. FHA loans require two forms of mortgage insurance. One insurance premium is paid in full upfront or, it can be financed into the mortgage. The otherrequired FHA insurance premium entails a monthly payment. FHA loans also require that the home meet specific conditions and must be appraised by an FHA approved appraiser.
FHA Loan Qualifications and Requirements
APPLY FOR AN FHA LOAN: http://floridahomeguide.net/applying-for-a-loan/
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