All Posts Tagged: homebuyers

5 reasons to consider an FHA loan

Victor Polich
Mortgage Banking

Are you considering purchasing a home in the near future, but having a hard time deciding what type of loan to apply for? If so, consider yourself one of many people dealing with the same issue. Trying to understand the difference between various mortgage loan products can be confusing.

Gold key with "FHA" on it, against red backgroundMy suggestion: Take your time and research all of your options. By doing this, you’ll have a better understanding of what products and programs you qualify for. One that you may want to consider is a Federal Housing Administration (FHA) loan. According to Experian, FHA mortgages have helped over 40 million Americans become homeowners.

Here are five reasons you may want to consider applying for an FHA loan:

1. You aren’t required to put down 20%. If approved for the loan, you’ll be required to put cash down 3.5% of the price of the home. And given the increase in home prices, coming up with a 3.5% cash down payment should be more manageable than a 20% cash down payment. Money that has been gifted to you can be used for the cash down payment, as well.

2. Fixed mortgage rates. FHA loans come with fixed mortgage rates. Having a fixed rate may give you peace of mind knowing that when the next rate hike hits, your mortgage loan rate won’t be affected.

3. Easy to qualify. Because only a 3.5% cash down payment and low credit score are required, qualifying for an FHA loan will likely be easier in comparison to other mortgage loans.

4. Low minimum credit score. If we check and find you have a credit score of 580 or above (and a 3.5% down payment), you’re more likely to get approved for an FHA loan (please note that other factors such as credit history and your debt-to-income ratio are also factored into the approval process).

However, even if your credit score is lower, you may still be able to qualify with a 10% down payment. Additionally, you won’t necessarily be disqualified if you’ve had a short sale, bankruptcy, or foreclosure in the past.

5. 203(k) loan available for fixer-uppers. The FHA offers the 203(k) loan for homes that are fixer-uppers. A fixer-upper is a home that can usually be lived in but needs work (i.e. minor or major repairs, reconstruction). If approved, that means that you’ll be allowed to get a mortgage for the amount of the purchase price in addition to funds needed to improve and repair your home, since it will be your primary residence. That is a great option to have because you’ll have one payment that covers both the mortgage and repairs.

Overall, FHA loans are designed to be more flexible when evaluating potential borrowers for approval. Contact your local mortgage banker or visit www.hud.gov for additional information.

Purchasing a home is a huge financial responsibility and commitment, so it’s imperative to do your due diligence.

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Millennials, take note: Median age of first-time buyers holds steady

Chad Royle
Posted by Chad Royle
Mortgage Banking
African-American couple on sidewalk with realtor, who

The majority of millennials haven’t hit their 30s yet, so the fretting about homeownership being pushed to an older age may be premature.

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One letter every homebuyer may want to write

Stew Larsen
Posted by Stew Larsen
Mortgage Banking
Young woman on a sidewalk with pen and paper as she considers what to say.

The dollars and cents of a purchase or sale matter, but our emotional connections to our homes and future homes can have an intangible influence.

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In the Market: We’re not gonna take it

Nneka Madus
Posted by Nneka Madus
Mortgage Market Analyst
Couple standing on opposite ends of a large moving box, bent over with their heads in the box.

Before jumping the gun, read some potential pitfalls on moving in before closing the deal.

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In the Market: Misguided ideas about FHA loans

Nneka Madus
Posted by Nneka Madus
Mortgage Market Analyst
Young man and woman sitting at a table with paperwork and a calculator.

Despite numerous benefits of FHA loans, there are misconceptions about them among sellers.

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