Many soon-to-be home buyers on the house hunt have to keep costs in mind when considering what type of home they are searching for. Some of these costs include monthly mortgage payments and the initial down payment. They also must decide what type of financing they will use. The type of loan a prospective home buyer chooses will determine how much the down payment on his or her home will be, as well as what costs will be incurred over time. It is smart for a homeowner to secure financing first because then they will know what price range they can afford in regards to housing and have an idea of what their mortgage payments will be.
Choose FHA Financing to Afford the Home You Never Thought You Could!
Compared to conventional financing, an FHA loan can make it easier to afford a new home. Because of their low rates and low down payment requirement, which is currently set at 3.5% of the purchase price, homeowners have more purchasing options than they would with a conventional loan, which requires a far more significant down payment and can have significantly higher rates. These features of a conventional loan can limit the buyer's options.
In addition to the benefits of low rates and a low down payment, FHA loans do not have strict eligibility requirements. This element of FHA loans makes them a more accessible option for moderate-income buyers who do not have perfect credit and cannot qualify for conventional financing. An applicant can have less-than-perfect credit and still be eligible for FHA loans as long as they have had at least twelve months without any delinquent mortgage or rent payments. Most lenders will require applicants to have a credit score of at least 620.
Some prospective borrowers who have decided they want to reap the benefits of an FHA loan have narrowed their housing search to include only HUD-approved housing. HUD has also expanded its approval criteria for condominiums so that borrowers have an even greater range of options to choose from in their housing search.
Now is a Great Time to Buy a Home and Save Money!
The economy and resulting crash in the housing market has lowered housing prices. Those who want to buy homes in higher-priced areas may find that they can get homes for a lower price than they anticipated. The lower the price, the less of a down payment the homeowner will have to put down, and if the home buyer is financing with an FHA loan, he or she will not have to come up with a large sum of money for a down payment anyway!
Interest rates are also quite low in today's market, especially for FHA loans. Once a homeowner has settled into his or her new home, having a lower interest rate will keep their mortgage payments low and leave the homeowner with more money for other important expenses.
It is a good idea for homeowners to discuss their options with a home loan specialist before making any final decisions. The specialist can provide them with information and answer their questions. Potential homeowners today have a unique opportunity to take advantage of the FHA loan benefits and the current market situation to buy the elusive home of their dreams!