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Why Should I Consider an FHA Home Purchase Loan?

There are many reasons for homebuyers to investigate an FHA

home purchase. First time homebuyers should explore FHA

loan options because it’s easier to qualify for an FHA home

mortgage. Your loan is guaranteed by the government, making

your application more attractive to lenders. Since the

typical first-time FHA home loan applicant is young and in

the early phases of their careers, chances are they still

have student loans and other debt to content with; an FHA

home mortgage often costs less and is more forgiving of

youthful indiscretions with credit and payments.

FHA home loans don’t require a big down payment at closing

time. For first-time homebuyers this can be a real plus;

that typical borrower in the early stages of a new career

often doesn’t have a lot of money set aside specifically

for purchasing a home. The FHA mortgage requires a low 3.5%

down payment, and that money can come from a variety of

sources including HUD down payment assistance grants.

For first time buyers, closing costs are another issue that

can be a financial drain; typical closing costs for FHA

home loans are around 3% or 4% of the total mortgage. One

advantage when taking out an FHA loan? FHA mortgage terms

may allow you to build in closing costs into your mortgage.

FHA home mortgages aren’t just for first-time home buyers.

FHA refinance loans can help people get out of toxic debt

situations caused by sub-prime mortgages with interest

rates that have spiraled out of control. Are you facing

default or foreclosure on a conventional loan? FHA home

mortgage refinancing is a godsend for those who want to

keep their homes and prevent damage to their credit

ratings. There are several ways to get into an FHA home

loan for refinancing. The advantages include a low fixed

rate mortgage guaranteed by the FHA, predictable FHA

mortgage payments and lower interest rates for those who

qualify.

The FHA also provides cash-out refinancing for those who

need financing for things such as college or major home

improvements. An FHA cash-out refinancing mortgage may

offer lower interest rates than traditional home equity

financing loans; you may qualify for one of two FHA

mortgage plans which offer cash-out plans. One offers loan

amounts for up to 95% of the appraised value of the home,

another FHA refinancing loan offers amounts up to 85% of

the appraised value. Each program has its own specific

requirements and rules; talk to your lender to learn what

your options are under FHA cash-out refinancing mortgages.

FHA mortgage loans should take up no more than 29% of your

monthly income, and your loan officer will ask for

verification of your income to make the calculation. While

some people are able to get conventional loans using

“stated income”, requirements for FHA mortgage products

such as FHA refinancing loans require copies of your income

tax returns to verify the actual amount of money you report

to the government. If your job situation has changed since

your last tax filing, you may be able to furnish proof of

income through your new employer.

FHA home loans have requirements for income, debt-to-income

ratios, maximum loan amounts and other details; each type

of FHA loan is unique and must be applied for individually.

Ask your lender for assistance in learning which FHA

mortgage is right for you. If you aren’t satisfied with

your current lender, consider getting applying for an FHA

home mortgage at a new bank. Even if you have an existing

home loan, you can explore your options with FHA

refinancing someplace else.