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The lower down payments and more lenient lending standards make FHA loans one of the more popular options for mortgage borrowers. An FHA loan is a mortgage loan insured by the FHA also known as, the Federal Housing Administration. Borrowers who choose this option are required to pay for mortgage insurance, which protects the lender in the event the borrower defaults on the loan.
Why borrowers prefer FHA loans- The insurance, borrowers are required to pay is one of the main reasons people choose and prefer a FHA loan over other loan options. Lenders are able to offer these FHA loans at a significantly lower interest rate as well as be more lenient and flexible with their qualification requirements, which makes the FHA loan a favored option for borrowers.
Credit Score- Majority of lenders have a minimum credit score requirement which a borrower much meet or exceed before they are qualified to utilize the FHA loan. The down payment amount a borrower may have to pay depends on the borrower’s credit score. For example, a borrower with a credit score of 580 or higher may be qualified for a down payment as low as 3.5%. A borrower with a lower credit score than 580 may have to put down at least 10%. It’s helpful to know your credit score beforehand, but your lender can always help you obtain your score. For borrower’s who have a score lower than 500 are usually ineligible for a FHA loan, however there are steps you can take to increase your credit score.
Down Payment- While there are very few mortgage loans that don’t require a down payment, one of the favored reasons borrowers do choose the FHA loan over other loan options is the low down payment, at only 3.5% of the purchase price. Of course as stated above, that is if you meet the minimum qualifying credit score.
Closing Costs- One of the many benefits of the FHA loan is borrowers can have their closing costs covered by the seller, builder or even the lender. When the lender agrees to pay the closing costs they will usually charge a higher interest rate. However, borrowers can always compare loan estimates from competitor lenders to find the lender and options that work best for them.
FHA Approved Lenders- The FHA is a home loan program it is not a lender but more of an insurer, which means to utilize it your lender must be a FHA approved lender. Make sure to do plenty of research and compare lenders because not every FHA lender offers the same interests rates.
203(k)- The FHA offers a special loan program for borrowers who may need a little extra money for repairs to their new home. This special loan program is called a 203(k), utilizing this program allows borrowers to finance up to $35,000.00 for nonstructural repairs. For example, replacing fixtures, remodeling cabinets or even painting. The 203(k) loan amount is based on the projected value rather than the appraised value.
1. FIVE FHA HOME
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2. The lower down payments and more lenient lending
standards make FHA loans one of the more popular
options for mortgage borrowers. An FHA loan is a
mortgage loan insured by the FHA also known as, the
Federal Housing Administration. Borrowers who
choose this option are required to pay for mortgage
insurance, which protects the lender in the event the
borrower defaults on the loan.
KIDDIECONDOLOANS.COM
LENDER HOTLINE: 888-581-5008
3. Why Borrowers Prefer FHA Loans:
The insurance, borrowers are required to pay is one of
the main reasons people choose and prefer a FHA loan
over other loan options. Lenders are able to offer these
FHA loans at a significantly lower interest rate as well
as be more lenient and flexible with their qualification
requirements, which makes the FHA loan a favored
option for borrowers.
KIDDIECONDOLOANS.COM
LENDER HOTLINE: 888-581-5008
4. Credit Score
Majority of lenders have a minimum credit score requirement
which a borrower much meet or exceed before they are
qualified to utilize the FHA loan. The down payment amount a
borrower may have to pay depends on the borrower’s credit
score. For example, a borrower with a credit score of 580 or
higher may be qualified for a down payment as low as 3.5%. A
borrower with a lower credit score than 580 may have to put
down at least 10%. It’s helpful to know your credit score
beforehand, but your lender can always help you obtain your
score. For borrower’s who have a score lower than 500 are
usually ineligible for a FHA loan, however there are steps you
can take to increase your credit score.
KIDDIECONDOLOANS.COM
LENDER HOTLINE: 888-581-5008
5. Down Payment
While there are very few mortgage loans that don’t
require a down payment, one of the favored reasons
borrowers do choose the FHA loan over other loan
options is the low down payment, at only 3.5% of the
purchase price. Of course as stated above, that is if
you meet the minimum qualifying credit score.
KIDDIECONDOLOANS.COM
LENDER HOTLINE: 888-581-5008
6. Closing Costs
One of the many benefits of the FHA loan is borrowers
can have their closing costs covered by the seller, builder
or even the lender. When the lender agrees to pay the
closing costs they will usually charge a higher interest
rate. However, borrowers can always compare loan
estimates from competitor lenders to find the lender and
options that work best for them.
KIDDIECONDOLOANS.COM
LENDER HOTLINE: 888-581-5008
7. FHA Approved Lenders
The FHA is a home loan program it is not a lender
but more of an insurer, which means to utilize it
your lender must be a FHA approved lender. Make
sure to do plenty of research and compare lenders
because not every FHA lender offers the same
interests rates.
KIDDIECONDOLOANS.COM
LENDER HOTLINE: 888-581-5008
8. 203(k)
The FHA offers a special loan program for borrowers who
may need a little extra money for repairs to their new home.
This special loan program is called a 203(k), utilizing this
program allows borrowers to finance up to $35,000.00 for
nonstructural repairs. For example, replacing fixtures,
remodeling cabinets or even painting. The 203(k) loan
amount is based on the projected value rather than the
appraised value. Meaning, the loan is based off how much
the house will be worth after repairs and such are completed.
This program is great for a home that may seem a little out of
date and just needs a few upgrades.
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9. T O L E A R N M O R E
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C L IC K HE R E
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10. Justin McHood is Americas Mortgage
Commentator and has been providing
Mortgage commentary for over 10 years.
INFORMATION PROVIDED BY:
JUSTIN MCHOOD
MORTGAGE COMMENTATOR
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