FHA loans – Are they right for you?
Federal Housing Authority FHA loans are a great alternative for those with less than perfect credit who need a low down-payment with a great interest rate. The FHA was established by congress in 1934. They are not a lender but they insure the loans for the lenders.
An FHA loan is great for a first-time homebuyer because not many lending agencies will take a chance on a first-time buyer. You can only hold one FHA mortgage at a time, so owning multiple homes with an FHA mortgage is not possible.
FHA guidelines are not as strict and as hard to meet as the conventional loans. Those with a weak credit history and lower credit score will have a much easier time getting approved for an FHA mortgage. Lenders are more willing to take a chance because they know the loan will be paid by the FHA in the event of default.
The down payment for an FHA loan is much lower than conventional loans. They can run anywhere from three and a half percent to five percent.
FHA also insures loans for those homeowners wishing to refinance their existing mortgage loan offering lower rates.
For more information about applying for an FHA loan visit the loan specialists at Midland Mortgage.