Through the FHA loan, the government allows people to buy a home with a lower down payment. The loan also has lower closing costs and easier lending terms. The federal government insures the loan offered by approved lenders.
Primaryresidentialmortgage.com suggests that you consider a few important facts before applying for an FHA loan.
Easy to Qualify for
Because the FHA guarantees the loan, first-time buyers have better chances of qualifying. More lenders are willing to extend loans even to people living in disadvantaged neighborhoods. Even those with low credit ratings have a good chance of getting a loan. You can qualify even if you have a bankruptcy record.
Lower Down Payment
The required down payment can be as low as 3.5%, unlike the usual 20% for traditional home loans. The total cost is also lower, even if you have to pay insurance to the FHA.
Lower Interest Rates
Other than a lower down payment, loans guaranteed by the FHA also come with lower interest rates. But because the FHA does not provide the actual financing, you must negotiate with an FHA loan company for the best interest rates.
Helps Avoid Foreclosure
The government’s Making Home Affordable Program is for people who are facing financial difficulties. If you have defaulted on your existing mortgage, the MHA will help lower your payments to prevent foreclosure.
Helps with Home Upgrades and Repairs
You can use the FHA loan to fix or refinance your home. If you are buying a home that needs major repairs or improvements, you can get an extra $25,000 loan.
These are just some of the important features of the FHA loan that make it a great option for first-time homebuyers. It is easier to qualify for and it offers better terms for buyers who may find it difficult to get traditional home loans.