FHA Loans: Recommended Loans for You to Invest in New Homes
FHA loans are mortgages issued by FHA, the Federal Housing Administration in the United States. Every FHA loan is secured and guaranteed by the FHA, so, the debtors are able to use the loans under any condition. Even when they default, the lenders also have no right to cut off the loans, because the FHA will pay off the money.
With a FHA loan, the buyer is able to purchase a new house with very small down payment. Like VA loans, FHA loans are not accessible to all the individuals. FHA loans also have strict limitations on the qualifications of applicants. The requirements for FHA loans applicants are listed as following:
- You should own at least two years of steady employment, preferably with the same employer
- The last two years income should be the same or keep increasing
- Credit card report should have less than two thirty-day delays in the past two years, and the credit score should be more than 620
- Your bankruptcy must be at least two years old, and you must have perfect credit after that
- For foreclosure applicants, the foreclosure must be at least three years old, with a perfect credit after that
Why FHA Loans Attract People So Much?
FHA loans are now among the most famous loans in the United States. They are preferred by many people for a host of appealing features:
- Small Down PaymentsFHA loans really offer great help for the debtors. They allow the applicants to get new homes and houses with only very small down payments, as low as 3.5% of the appraised value of the new properties. For example, if the market price for the new house is $1000000, you are able to get the new home with only $35000.
- Few Closing FeesDuring the settlement process of the loans, you will be asked to pay off some required closing fees, and there is no exception to FHA loans. But FHA loans charge much less on closing fees than other loans do. Necessary closing fees for FHA loans just include lender origination fee, attorney’s fee, appraisal fee, home inspection fee, title insurance, deposit verification fee and taxes.
- Credible GuaranteeYou can obtain very strong and reliable protection by getting FHA loans. The Federal Housing Administration centre will be happy to help you under any circumstance. If you run into some financial crisis and can not afford the monthly payments, the Federal Housing Administration will pay for you. So, you do not need to worry that the lender will repossess your houses once we default the loan.
- Low Interest RatesThe interest rates for FHA loans vary from fixed rate FHA loans to adjustable rate FHA loans. But they are much lower than the market rates. For example, the interest rate for a 15-year fixed rate FHA loan was 2.750% in 2011, and the annual percentage rate was 2.945%. A 5-year adjustable rate FHA loan may offer a 2.250% interest rate and 2.971% annual percentage rate.