After the collapse of the housing bubble, home buyers have been finding it more difficult to take out mortgages and ensure that they will be able to pay them. For this reason, loans approved by the Federal Housing Administration (FHA loans) have been seeing increased popularity due to a number of advantages they offer over conventional loans. Listed below are some of the main characteristics of FHA loans and why they might be the best loan for you.
FHA loans are insured loans that are primarily characterized by the fact that they are insured by the FHA. Borrowers with an FHA loan pay a mortgage insurance that can be used to protect the lender should the borrower ever default on the loan in the future.
First, before looking at the advantages of a FHA home loan, a person must understand and know what exactly a FHA home loan is. A FHA home loan is a mortgage home loan that is offered by independently approved lenders of FHA home loans which loans are insured by the Federal Housing Administration.
Being insured by the federal government means that lenders of FHA home loans are able to take bigger risks while loaning their money to an individual for a mortgage loan, which in turn makes it possible for lenders to offer better deals to homeowners who apply for the FHA home loan.
The FHA home loan program was developed and instituted following the Great Depression which caused many homeowners to default on their mortgages and caused a wide sweeping trend of foreclosures and homeless families.
The successful design of the FHA home loan program enabled home loans to become more affordable and more accessible to home buyers by lessening the risk to lenders through federal insurance.
FHA loans have lower closing costs Closing costs can include appraisals, credit reports, and title expenses, and can be an expensive part of a conventional loan. They also allow builders and lenders to pay some of the borrowers closing costs, reducing overall price.
FHA loans still allow for flexibility In order to acquire an one of these loans, the borrowers must get it through an FHA-approved lender. While not all lenders are FHA-approved, the number of approved lenders is so high that there is still a competitive market of interest rates and costs.
For comparison, a regular home loan down payment is typically around twenty percent of the total loan, which can be in the tens of thousands of dollars and therefore out of reach of would-be home buyers, while the down payment of a FHA home loan is a minimal three and a half percent, which down payment totals in the more easily affordable thousands of dollars range.
While there are advantages and disadvantages to everything, including FHA home loans, a person or a prospective home buyer cannot begin to make the right decision for their personal home loan needs until they have all the facts before them and have been educated on the various pros and cons of every home loan possibility.
For this reason, a prospective homeowner should investigate different home loan options, including and especially a FHA home loan because of its great advantages, before making a decision on which type of home loan they will apply for to receive financing for their new home.
FHA loans are insured loans that are primarily characterized by the fact that they are insured by the FHA. Borrowers with an FHA loan pay a mortgage insurance that can be used to protect the lender should the borrower ever default on the loan in the future.
First, before looking at the advantages of a FHA home loan, a person must understand and know what exactly a FHA home loan is. A FHA home loan is a mortgage home loan that is offered by independently approved lenders of FHA home loans which loans are insured by the Federal Housing Administration.
Being insured by the federal government means that lenders of FHA home loans are able to take bigger risks while loaning their money to an individual for a mortgage loan, which in turn makes it possible for lenders to offer better deals to homeowners who apply for the FHA home loan.
The FHA home loan program was developed and instituted following the Great Depression which caused many homeowners to default on their mortgages and caused a wide sweeping trend of foreclosures and homeless families.
The successful design of the FHA home loan program enabled home loans to become more affordable and more accessible to home buyers by lessening the risk to lenders through federal insurance.
FHA loans have lower closing costs Closing costs can include appraisals, credit reports, and title expenses, and can be an expensive part of a conventional loan. They also allow builders and lenders to pay some of the borrowers closing costs, reducing overall price.
FHA loans still allow for flexibility In order to acquire an one of these loans, the borrowers must get it through an FHA-approved lender. While not all lenders are FHA-approved, the number of approved lenders is so high that there is still a competitive market of interest rates and costs.
For comparison, a regular home loan down payment is typically around twenty percent of the total loan, which can be in the tens of thousands of dollars and therefore out of reach of would-be home buyers, while the down payment of a FHA home loan is a minimal three and a half percent, which down payment totals in the more easily affordable thousands of dollars range.
While there are advantages and disadvantages to everything, including FHA home loans, a person or a prospective home buyer cannot begin to make the right decision for their personal home loan needs until they have all the facts before them and have been educated on the various pros and cons of every home loan possibility.
For this reason, a prospective homeowner should investigate different home loan options, including and especially a FHA home loan because of its great advantages, before making a decision on which type of home loan they will apply for to receive financing for their new home.
About the Author:
Government Loan Pro is a licensed VA and FHA mortgage broker and we can provide a large variety of FHA Loan options for you and your family. We make it easy to find refinancing options for your VA home mortgage loans, great rates on purchasing loans, and we'll connect you to the mortgage lender who can answer your questions and help you make the decisions that fit your financial needs.
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