When it gets down to qualifying for your mortgage, you have several programs and loan types available to you, and with so many mortgages available it’s important for you to select the best one for your specific home loan needs.
One of your choices for a home mortgage program is an FHA loan. This program is designed to help first time home buyers. You can use FHA loans for purchasing your primary residence for refinancing an existing mortgage. Here are some of the benefits that come with FHA programs:
Seller Paid Closing Costs – FHA loans enable sellers to contribute as much as 3% on the closing costs. This can be a valuable thing for helping new clients to buy their home and lower their cost for closing. Sellers can pay the closing costs and prepaid items such as taxes, home insurance, and interest for the loan. An example would be like a buyer purchasing their home for $250,000. A seller is then able to contribute as much as $7,500 toward the closing costs.
Lower Down Payment – FHA mortgages offer you a loan program that has a low down payment requirement. Their current down payment minimum is set at 3.5% of your loan amount. Your source of funding for your downpayment can come from a wide variety of sources like churches or family members, 401K withdrawals, or your savings account. By doing this the FHA makes it possible for many first time buyers to purchase their first home.
Lowered Mortgage Rates – On most of these loans the FHA offers very competitive rates. They are not tied into credit scores like conventional loan rates. If you are a homebuyer with a credit score of 660, then getting your FHA mortgage would mean rates that are the same as if your score was 740. With conventional loans your credit score of 660 would mean an increase in your rates of around .75% to get to the 740 level.
Streamline Refinances – Now we come to a benefit from FHA mortgages that enables you to streamline refinance. The streamline refinance is used whenever clients refinance their existing FHA mortgage loans creating a brand new FHA mortgage loan. Streamline refinancing lets the homeowner refinance using limited paperwork. It may be in the homeowners best interest to think about full refinancing over the streamline option. Consult with your mortgage consultant to see what program will work best for your situation.
Mortgage Insurance – Another good benefit to FHA mortgages in getting approved for mortgage insurance. These FHA loans will approve your mortgage insurances as long as your home loan gets approved. It’s not the same as conventional loans. There are times when home buyers can get approved for their mortgage loans and then be denied approval for mortgage insurance. This can mean having the whole loan turned down, but not so with the FHA mortgages. Their insurance payments are considerably less than private mortgage insurance.
FHA home mortgages can be a really good way to buy or refinance your house. It’s important that you understand all your available benefits that come with each mortgage program you might apply for. This helps you to make sure you get the best possible home loan.