When it’s time to purchase or refinance a home, you have many options, including conventional, VA, and HARP refinance loans. One choice that might be right for you is an FHA Mortgage Loan. Millions of Americans have used this option to make a house their home.
Because your home could be one of the biggest investments in your life, it’s important to research and decide carefully.Below are a few things you should know about this convenient opportunity before making your decision.
FHA mortgage loans are insured by the Federal Housing Administration. This puts less risk on the bank, making banks more willing to loan to people with lower down payments or credit scores. The FHA mortgage loan program has made homeownership possible and affordable for millions of Americans.
These loans make a great option for potential homebuyers who don’t have the credit score or down payment necessary for conventional loans. FHA mortgage loans are also right for homeowners who want to refinance but do not yet have 20% equity in the home. Additionally, if you have bankruptcies or foreclosures in your past, you may still qualify for an FHA loan.
The minimum credit score for an FHA mortgage loan is only 580, much lower than with other types of loans. The down payment required for this type of loan is only 3.5% of the total, as opposed to 20% with conventional loans. If you have gone through a bankruptcy or foreclosure, it must have been over two years ago to qualify for this mortgage.
If you have been denied for an FHA loan in the past, you may qualify now. New guidelines are in place that allow more people to qualify for this type of loan.
Like conventional loans, FHA mortgages come with a variety of options. You can choose between 15, 20, 25, and 30-year loan terms, whichever works for you. You can also pick either an adjustable-rate or fixed-rate loan. Ready to pay your loan off earlier than expected? That’s no problem with an FHA loan.
If you bought your current home with an FHA loan, you may be eligible for an FHA Streamline refinance mortgage. This option requires no appraisal and you can close in just 30 days. This is a great choice for existing FHA loan homeowners.
Overall, an FHA mortgage loan is great for many potential and current homeowners who want to get ahead on finances. Talk to your lender to see if this is the right choice for you.