Once you are knee-deep in the house hunting process, you'll quickly see that deciding on the actual house isn't your only big decision. Unless you're paying in cash, you will need to choose what type of loan you want to use to purchase your home. One type of loan available is an FHA loan, which is a mortgage loan insured by the Federal Housing
Administration. Here are three secrets no one has told you about FHA loans.
Saving for a down payment can be the biggest obstacle between rentals and ownership. One of the best secrets about FHA loans is that the required down payment is 3.5%.
Because many mortgages require a 10% down payment, the jump to 3.5% really makes a down payment a more accessible goal for many individuals.
Many potential home buyers worry that less-than-ideal credit can ruin their home-buying dreams. However, FHA loans require that borrowers pay a mortgage insurance, which protects all parties involved. Thanks to this insurance, individuals with credit scores between 500-570 can apply. Although, individuals with credit scores below 570 are required to put at least 10% down.
Closing costs can definitely add up, but the FHA loan allows for a buyer's closing costs to be covered in part by sellers and/or builders. This can potentially include inspections and title reports.
If you have a question or curious if an FHA loan is right for you, contact Midland Mortgage today!