There is perhaps nothing more attractive to first-time homebuyers than no and low down payment mortgages. Saving up a down payment of 5 percent or even 10 percent is a significant barrier to entry for many Americans. Among the most popular mortgage options with these borrowers are FHA loans. The Federal Housing Administration is behind nearly 1 in 5 of all homebuyers.
The reasons why buyers flock to FHA loans are compelling. Here are the Top Ten Reasons why FHA loans remain very popular with borrowers:
1. Down Payments
FHA requires just 3.5% down, making it even easier for borrowers to secure financing. This opens the market to potential borrowers that do not have the down payment, closing costs, and other fees, but do have the ability to meet monthly repayments.
2. Lower Credit Scores
There is a sizeable demographic of potential borrowers with less the prefect credit. The Federal Housing Administration are the most accessible to the most people. FHA encourages lenders to look past just a FICO score. Many first-time buyers don’t have a lot of credit history which can keep credit scores low. In these cases, we can use alternative credit sources, items which show you pay your bills, but aren’t credit accounts.
3. Assumable Loans
One of the genuinely unique aspects of an FHA loan is that they assumable. A buyer can purchase the house and inherit the existing loan on the property. Imagine the attraction of a homebuyer assuming a loan with a locked-in low interest rate. Of course, the buyer must still qualify for the original terms of the loan for it to be assumable, but this flexibility is a great selling point.
4. FHA Mortgage Insurance Premiums
FHA MIP (Mortgage Insurance Premium) serves the same purpose as conventional loan PMI (Private Mortgage Insurance) This insurance take much of the risk out of high Loan to Value loans and allows for loan that don’t require a 20% down payment.
5. 100% Gift Funds
The FHA loan program require that there is a 3.5% down payment put down toward the purchase of the property. Many young first-time home buyers have not had the time or resources to save this amount of money. FHA realizes this and will allow those close to the borrower to gift the home buyer this down payment. Call American Property Financial for the details of how this works.
6. Residence Status
FHA loans are available to Permanent Resident Aliens and with the proper documentation loan with all the beneficial characteristics are available. A great feature of the FHA program and should be considered
7. FHA-APPROVED Lenders
All FHA loans are the same, despite the lender and all lenders offer the same kind of loan. You should look at the interest rate, the origination charges, and the service the lender will provide. All these are why American Property Financial is considered a great lender.
8. Lower Rates
Since, FHA is a loan guaranteed by the Federal Government it has some of the lowest rates available. A great bonus is we have no origination charges, Therefore, lowering your costs to make buying a home easier.
9. Renovation Loans
FHA has a program (203K) that can be used for renovations to a home. These improvements may need a new kitchen, baths, roof and even more extensive renovations. This loan can be used for a home you want to purchase and by existing home owners that want to upgrade their home. A great program with a great flexibility. Call for more details on how the great program can help you get the home you’ve been dreaming about.
10. Construction Loans
We offer a One-Time Close Construction loan. All of the advantages of the FHA loan program and this loan allows you to take care of all the paperwork for the mortgage and construction loan at one time. This loan program can be used for traditional built homes and manufactured homes.