About FHA Loans
Admittedly, FHA loans make it easier for people to take a home loan, but they are not available to everybody. Although there is no income limits for you to acquire a FHA loan, the amount of loan that you can borrow is related to your home prices. To qualify for an FHA loans, you need to be among people who:
- have been foreclosed on
- have decent credit
- have undergone bankruptcy
- have a low down payment, say at least 3.5%
- have two years of steady employment
Pros and Cons of FHA Loans
The reasons accounting for the popularity of the FHA loans are various. Generally, the loan has the following advantages.
The loan is very easy to qualify for. People with less-than-perfect credit can get it. What is more, it requires a low down payment, which can reduce the borrower’s financial pressure. The federal government provides loans for FHA-approved lenders so that those lenders bear less risk of loss if they lend to borrowers who could default on their mortgage payment. Lenders are willing to provide loans, even those large mortgage loans.
- Even if you want to sell your home in the future, you can still take the loan, because it is assumable. That is to say, your home buyer can assume the loan you have.
- FHA loans can be used for both home purchase and refinance.
However, there are some unavoidable disadvantages of FHA loans. Since the loan has no strict application standard, it requires two kinds of premiums.
- Upfront Mortgage Insurance Premium
- This kind of premium is an upfront monthly premium payment. Usually, the borrower needs to pay a premium of 1% of the home loan no matter what the credit score he has got.
- Annual MIP
Although the name of the premium is Annual MIP, it charges the borrowers per month. The amount of the premium is based on a borrower’s length of loan and loan-to-value ratio. In most cases, the Annual MIP has two types. One is 0.85% and the other is 0.9%. If you can meet the following requirements, you can stop paying your mortgage premium. For mortgages with terms over 15 years, the MIP will decrease after 5 years. If the remaining balance on the loan is 78% of the value of your property, the MIP will also drop off. For mortgage with terms 15 years and less and with LTV ratios of 90% or greater, the MIP will stop only when the LTV ratio reaches 78%.
In our life, we may meet certain financial emergencies, such as medical bills, family vacations, college education, credit card debts…which make our finance difficult to manage.When we are strapped in any of these circumstances, refinancing will come to our help by covering the expenses.
Are you a teacher looking for inexpensive financing opportunity to purchase a home? Be sure to check your eligibility for the Teacher Next Door program before you approach a private mortgage company.
As the critical part of the Obama Administration’s strategy, the Making Home Affordable (MHA) program helps eligible homeowners, who are struggling with home mortgages, to modify or refinance their mortgage loans and lower monthly payments.
Today in the US, many first-time home buyers see FHA loans as a shortcut to homeownership. Home mortgages in this kind are insured by the Federal Housing Administration, featuring low down payment and less stringent income requirements.
HUD homes… well, is this the first time that you hear about this term? Then what does a HUD home refer to? Can it be purchased or sold like common properties? Let me tell you. But before that, I first would like to introduce two governmental departments to you – HUD and FHA.
Is there any financing option which enables you to make home energy improvements and lower your monthly utility bills? Well, I think FHA’s Energy Efficient Mortgage is what you are looking for.
As an important tool for the revitalization of communities, FHA’s Section 203(k) Rehabilitation Mortgage enables qualified homebuyers to repair or upgrade their single family properties before they move in.
If you are 62 years old and over, live in a house which you own outright and have a low mortgage balance, you may be eligible to participate in FHA-insured Home Equity Conversion Mortgage (HECM) program and turn your home equity into cash to supplement your income, or cover monetary emergencies.
Maybe currently you are considering a 203(k)-insured loan to purchase a property that needs improvement or modernization. Then I bet my article would be a great help to you, which guides you on how to get a 203(k) loan and explains the issues that you may be concerned with.
Typically in the US, the lender would not offer you the money to finance a house unless the improvement is complete, and also, you can not make home repairs unless the house has been purchased by you. Then how to get out of this catch-22 situation?