FHA Home Loans
The Federal Housing Administration is a government organization that was created for the purpose of helping qualified buyers realize the dream of home ownership. They do this in a few different ways. First, they guarantee re-payment to the mortgage lender. What this means to you, is the comfort knowing if you ever default on your home mortgage, the FHA will repay the lender. This makes lenders much more likely to loan you money to purchase a new home because they have a very good guarantor for the loan.
Low Down Payments
The FHA also makes it easy for qualified borrowers to get a mortgage loan started by offering a low down payment. Some mortgage lenders require as much as a 20% down payment based on the value of the house. If you're purchasing a $400,000 house then you might have to come up with as much as $80,000 out of your pocket before a conventional mortgage lender will loan you any money. By comparison, FHA home loans only require a 3% down payment. This is a difference of $68,000 when compared to a conventional or traditional mortgage. If you're like most Americans considering home ownership, then that's a huge different. In fact, it's the kind of difference that could affect your ability to purchase a house.
Assumable Mortgages
Another way FHA loans help homeowners is through something called assumable mortgages. Having an assumable mortgage can be very beneficial, regardless of whether you're buying or selling. What this means is that the buyer can assume the terms and conditions of the mortgage by simply meeting the qualifications of the FHA, which are fairly straightforward and simple to meet. If you're buying a house and mortgage rates are high for new loans, you could find a great deal on a lower-rate assumable FHA mortgage that originated when mortgage interest rates were lower. If you're selling, this is a great feature to highlight as it represents an easier approach for many buyers to qualify for a mortgage.
FHA Home Loan Rates
The FHA has consistently offered very competitive mortgage rates and have many different programs based on the type of loan you're asking them to guarantee. They even offer great home mortgage refinance rates, which is great if your current mortgage interest rate is no longer competitive. A qualified mortgage lender can answer your question about FHA home loans, rates, and details.