Friday, November 27, 2015

What You Should Know About a FHA Mortgage


Almost all homebuyers need to get a mortgage of some sort in order to afford their home. These loans are vital to the economy as we found out during the economic crisis of 2008. If you are trying to buy a piece of property you should look into getting a loan from the Federal Housing Administration. This branch of the Department of Housing and Urban Development has been working to insure loans to homebuyers. This means you can get lower interest rates with friendlier term limits if you take a FHA loan. Let's explore FHA loans a little more and see how they work.

How It Works

You are probably wondering how the federal government can offer low interest rates while at the same time making the qualifications for a FHA loan very easy and relaxed. The trick is simple. The borrower pays for mortgage insurance which protects the lender in the case that the borrower defaults on their loan. Pretty simple, right? Because each borrower is essentially covering themselves in the event that they cannot make their payments, the FHA can offer the consumer a loan with superb terms! If you are trying to get into a home, but have been turned down by the banks, you need to see what the FHA can do for you!

Credit Qualifications

For anyone with a credit score over 580, the FHA can offer you a mortgage with a down payment that is as low as 3.5 percent. Consumers who fall into the 500- 579 range are looking at a down payment of roughly ten percent, and those with a credit score under 500 generally do not qualify. However, the FHA can and will make exceptions for people with unorthodox or insufficient credit histories who do not have a credit score of at least 500. To see if you qualify for exceptions you need to speak with an FHA lending specialist.

Closing Costs Could be Covered

Buying property comes with a lot of other costs as well. These costs include, appraisals, title expenses, and credit reports. The FHA allows lenders, sellers, and builders to cover closing costs in order to entice a consumer to purchase their home. However, if a lender covers your closing costs, you will generally end up paying a higher interest rate on your mortgage. You will be able to compare rates between lenders with and without costs covered, so that you can make the best choice for your situation.

It is On Your Lender

The FHA is not the institution that is going to give you the money to put down on a residence. The FHA is merely an insurance fund, so if you are looking to get an FHA mortgage, you need to make sure that your lender is FHA approved. It is also important to note that not all FHA approved lenders offer the same rates even on the same loan, so it is still important to shop around for the best possible rates.

The FHA makes getting a new home a lot easier. See if your lender is FHA approved, and learn more about what they can offer you.

When looking for a Dallas mortgage, visit Benchmark Bank. Learn more about our services at https://www.benchmarkbank.com.
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