3 Benefits of Obtaining an FHA Loan
Many people are taking the steps needed to purchase their own homes. Statistics gathered from the 2016 National Association of REALTORS Profile of Home Buyers and Sellers found that 35% of people purchasing homes were first time buyers. Before searching for the term mortgage company near me, it’s important to know what types of mortgage loans are available. In this post, you’ll learn the importance of FHA loans for home buyers.
The Purpose of an FHA Loan
If you’re trying to purchase a home, you’ll want to know about the Federal Housing Administration or FHA. This administration offers loans that are backed by the government. These types of loans help homeowners fund the purchase amount needed for a new home. Statistics gathered from the 2017 NAR Home Buyer and Seller Generational Trends Report found that 24% of buyers used an FHA loan.
Important FHA Loan Benefits
It’s understandable to wonder what makes this type of loan beneficial. After all, there are other types of loans available to home buyers. Considering that, here are three reasons why you should consider an FHA loan.
- Great for Those Without Perfect Credit
It’s understandable to wonder about FHA loan requirements. Fortunately, this type of loan has more relaxed credit requirements than you might think. In most cases, buyers need a minimum credit of 500 to qualify for this loan. If your credit score is between 500 to 579, you’ll likely be required to make a 10% down payment.
- Lower Minimum Down Payments
If your credit score is at or above 580, you’ll be able to qualify for a down payment as low as 3.5%. This is one reason why many buyers try to obtain FHA loans. If your desired home costs $100,000, you would only need to put $3,500 down. These lower percentages often help buyers having difficulties making large down payments.
- Possibility of Obtaining a 203k Loan
Not every home buyer is looking for a brand new home. Many people look for homes known as fixer uppers. These homes might need renovation work. However, they’re often available for a much lower purchase price than other homes. While you might think that it’s impossible to obtain renovating funding through an FHA loan, this isn’t true. In fact, there is something known as a 203k loan that you’ll want to know about. The FHA’s 203k loan allows buyers to qualify for remodeling, flooring, plumbing, HVAC, and outdoor renovation work. Therefore, this type of loan works well for buyers looking to renovate a less than stellar property.
To summarize, it’s often beneficial for homeowners to obtain FHA loans. You might ask yourself should I find a mortgage company near me? The answer to this question is yes. Using the search term mortgage company near me ensures you’ll find plenty of local lenders. However, it’s important to find the right mortgage company. You’ll want to find a company offering competitive rates and friendly service.