When a person is looking to buy a new home it can be a very stressful and time-consuming process. Many future homeowners will turn to an FHA loan. There are many reasons why home buyers will lean towards an FHA loan.
Easy To Qualify
The first of many reasons why a home buyer will lean towards an FHA loan is that it is easy to qualify. These are government run programs that promise the lenders that they will get paid back their money if the borrower defaults on the loan. An FHA loan is insured up to around 97% of the loan.
Perfect credit is not needed. It used to be that a borrower could get an FHA loan without a credit check at all. Now it is required by FHA that a borrower have a credit score of generally between 580 and 620.
If a borrower does not have a credit score at all it might be very difficult for the borrower to get a loan at all. It is a good idea to start building credit. It is easy to do. By obtaining a credit card, using it a couple of times a month and paying it off every month you will find your self with a great credit score.
A requirement by FHA is that you are not allowed to have more than two accounts over due by thirty days in the last two years.
Low Down Payment
Another advantage of an FHA loan is that a very low down payment is required. The usual down payment on an FHA loan is about 3.5%.
There are many ways to obtain the money for this down payment. You can either use your savings or have your parents or a charity give you the money as a gift. The only mortgage unsecured loans program that allows this currently is FHA.
The interest rates with FHA loans are great. To see this fact for your self you should compare the rates for an FHA loan against the conventional loan rates. When compared you will find that the difference between the two rates could be as little as a half percent. When shopping around for a lender you may even find some FHA loan rates that are lower than a conventional loan. The other advantage to this interest rate is that the interest rate does not vary from year to year. They pretty much stay around the same rate.
Stay In Your Home
The reason why these FHA loans are insured is because HUD does not want your house back. They want you to either stay in your home until the loan is paid in full or they want you to sell it. They have been doing this since the year 1934 so it must be working.
When looking into a home loan especially if you are a first time home buyer an FHA loan might be the step in the right direction for you. Ask your personal loans lender for an FHA loan and see if you fit the bill.