Home Financing: Why People Apply for FHA LoansInk Well Mag November 15, 2015 0 COMMENTS
For many people, access to credit remains a barrier to pursuing their investment dreams. Owning a house requires a tremendous amount of cash that is hard to earn within a few years. The most economical way to own a dream home is by taking a mortgage.
With several types of home loans available, you need to analyze each and select the best that suits your income pattern. One of the most preferred options is the FHA home loan.
The people of DirectMortgageLoans.com provide a quick preview of why this loan is attractive to homebuyers:
Lower down payment
When it comes to owning an expensive house, you may need to put down a significant amount of money if you take a conventional mortgage. Most lenders offering conventional loans require a minimum of 10% of the total value as down payment. It may bar you from getting the house that you want, or you may need to wait for a later date to raise the amount.
FHA loan, on the other hand, requires a lower amount of down payment. The cost may go as low as 5%. This is why many people prefer this mortgage option.
Simple approval process
Some lenders require you to take mortgage insurance from approved private companies if you choose a conventional loan with a down payment below 20%. The private companies adopt the loan based on your credit scores, with most of them declining the approval if your credit scores are below 700.
With FHA loans, the government pays the insurance and follows a simpler approval process than private firms. The FHA loans allow a credit score that is as low as 500.
Low mortgage costs
Other than the interest rates, the closing costs are likely to increase the total amount of a conventional loan. FHA loans come with lower closing costs that range from 2% to 3% of the full mortgage. With the government backing the loan, you are sure to get lower interest rates that make repayments more affordable.
Enjoy the repayment flexibility that comes with FHA mortgage loans. Choose your financing option wisely to make the most of your home purchase.