Five Ways an FHA Loan Can Benefit You
Not all mortgage loans are created equal. There are a vast array of different mortgage options out there, and some, such as FHA loans, offer additional benefits. If you are in the market for a new home, here are five reasons why you should consider exploring an FHA loan:
Low Down Payment
FHA loans are advantageous for those with limited money set aside for purchasing a home. Compared to conventional loans which typically require minimum down payments of 5%, FHA mortgages require down payments as low as 3.5%. So, if you are a first-time homebuyer, or simply do not have a large sum of money saved up for purchasing a home, an FHA may be the perfect option for you. On the other hand, if you are a first-time buyer, you may also consider exploring 3% down loans.
Easy to Qualify
Not only are FHA loans less expensive than other loans, but if you have a credit score of 620 or higher, most lenders will be able to help. FHA loans are backed by the federal government. You can see if your credit score will qualify you for a loan by getting pre-approved.
Easy to Refinance
FHA loans offer lenient requirements for those looking to refinance their homes as well. With an FHA loan, one can refinance his/her home with no appraisal. Furthermore, FHA loans allow homeowners to refinance nearly 98% of the value of their homes.
Predictable Payments/Low Interest Rates
FHA loans are backed by the federal government to help make homeownership accessible to people with either average credit scores and/or limited savings. FHA loans offer low interest rates and predictable payment options. FHA borrowers do not have to worry about their payments varying from month-to-month. Instead, they can plan their payments ahead of time and then focus their concerns on saving money for the future.
Flexible DTI Requirements
A person’s DTI (debt-to-income) compares the total amount of debt obligations, or payments, he/she must pay on a monthly basis to his/her total monthly income. The lower the DTI ratio, the better off one is, financially-speaking. Unlike conventional mortgage loan options, which typically require borrowers to have a DTI ratio of 45% or less, FHA loans allow borrowers to have ratios as high as 57%. So, if you are a person who is tied to high fixed monthly-payments, don’t count yourself out of financing a mortgage.
Every mortgage option has its advantages and disadvantages. FHA mortgages are more beneficial to some people than they are to others. If these benefits are worthwhile to you and you would like to learn more about FHA mortgages and receive a custom rate quote, contact us online or at 708-531-8388.