Now is a great time to buy a home, and the media has let you know about it. What the media won’t tell you is why, and what your options are.
Many families are looking to buy, but they hear about FHA and they aren’t sure what to make of it. So, I am here to help answer those questions.
Here is some basic information that you can utilize as a first time home buyer, or if you are buying your second home but want to know what this is all about.
FHA is great for the first time home buyer because it allows you to put as little as 3.5% down. Most families don’t have 20% to put down on a home, so this is helpful.
FHA also will allow up to 6% seller concessions, so this aids in the process of buying the home. This is great for the first time home buyer since most first time buyers are young couples just starting out.
This is also beneficial for you because this will keep your payments low. Low monthly payments are essential right now in these tough economic times. It helps keep your pocketbook stable in case of an emergency.
FHA is beneficial for those who have credit concerns. FHA is not a subprime loan and is not for everyone, but they are more lenient with past derogatory debts and will look closely at your credit over the past year.
Don’t casually consider that it’s been over the past year, you want to specifically examine the past 12 months. So, while your credit doesn’t have to be perfect this isn’t a license to go out and blow your credit rating because that isn’t acceptable.
Keep in mind that even if you have had a bankruptcy you can still get a loan, but what FHA is looking for is an indicator of how you have re-established your credit since that time.
FHA loans have lower rates because these lenders that carry the loans are insured by the government. FHA also allows you to use gifted funds towards your down payment, and that could mean a gift from a family member or friend, or even a charitable organization.
The money does need to be sourced, and they will want the information of the donor so be sure to be upfront with anyone who is willing to provide you with these gifted funds.
FHA also focuses on fixed-rate mortgages to keep your payment the same all the time. They view variable interest rate loans as risky for most borrowers.
While they do not tend to give variable loans, they are available. Having a consistent payment is best for your planning so that you know what to expect every month.
FHA is in your court, and they ensure your loan so they will do what they can to help you keep your loan so that you can avoid foreclosure.
There are options available so be sure to ask me what that means. FHA is overall the best loan for any borrower, not just the first time homebuyer.