Facts On FHA Mortgage Loans
If you've decided it's time to make your first home purchase then it is also time to shop around for the best mortgage loan deal. Usually, the best loan options you'll find will be FHA mortgage loans. FHA is an acronym standing for Federal Housing Administration. This organization was created by the government in 1934 in an effort to help more people who want to be home owners realize their dream.
The Federal Housing Administration doesn't actually issue the loan. Instead, they work with lenders to insure the loans which helps absorb the risk of lending to borrowers, especially first time home purchasers. If you are a first time home buyer, you might have great credit, but you don't have equity built up in a previous home that could transfer to a down payment on your new home. Without equity, it is riskier for banks to lend you money.
FHA mortgage loans allow for the purchase of a home with a small down payment. This is obviously ideal for a first time home purchaser. It can be really difficult for middle class individuals to save up enough money for a decent down payment on a home. Even when you have a steady income, you still have to pay rent, car insurance, phone bills, groceries, all of which make it really difficult to save a large sum of money.
Lower interest rates mean that the entire cost of the loan is less than it would be with a higher interest rate. Lower interest rates are also beneficial because they lower the monthly payment on the mortgage as well. Lower monthly mortgage payments usually means that more people will be able to afford the payments and can move on from renting and begin putting their money towards something they can owe entirely some day.
The first few years of a mortgage, the payments you make are primarily towards interest. If the interest rate is lower, your monthly payment will be lower. This is just another way that FHA loans help make houses more affordable for prospective buyers.
One important thing to remember if you plan to try to qualify for a mortgage any time soon is to keep your credit history in good standing. Don't make any major purchases on credit and try to pay down as much debt as possible before applying for the loan. This will put you in a better position to qualify for the amount you need with the best interest rate possible.
FHA mortgage loans are absolutely the best mortgage option for first time home purchasers. If you hope to buy your first home soon, do all you can to prepare to qualify for the loan. It is a financially sound mortgage that is the least expensive long term option.
The Federal Housing Administration doesn't actually issue the loan. Instead, they work with lenders to insure the loans which helps absorb the risk of lending to borrowers, especially first time home purchasers. If you are a first time home buyer, you might have great credit, but you don't have equity built up in a previous home that could transfer to a down payment on your new home. Without equity, it is riskier for banks to lend you money.
FHA mortgage loans allow for the purchase of a home with a small down payment. This is obviously ideal for a first time home purchaser. It can be really difficult for middle class individuals to save up enough money for a decent down payment on a home. Even when you have a steady income, you still have to pay rent, car insurance, phone bills, groceries, all of which make it really difficult to save a large sum of money.
Lower interest rates mean that the entire cost of the loan is less than it would be with a higher interest rate. Lower interest rates are also beneficial because they lower the monthly payment on the mortgage as well. Lower monthly mortgage payments usually means that more people will be able to afford the payments and can move on from renting and begin putting their money towards something they can owe entirely some day.
The first few years of a mortgage, the payments you make are primarily towards interest. If the interest rate is lower, your monthly payment will be lower. This is just another way that FHA loans help make houses more affordable for prospective buyers.
One important thing to remember if you plan to try to qualify for a mortgage any time soon is to keep your credit history in good standing. Don't make any major purchases on credit and try to pay down as much debt as possible before applying for the loan. This will put you in a better position to qualify for the amount you need with the best interest rate possible.
FHA mortgage loans are absolutely the best mortgage option for first time home purchasers. If you hope to buy your first home soon, do all you can to prepare to qualify for the loan. It is a financially sound mortgage that is the least expensive long term option.
About the Author:
Frank findsmortgages with bad credit for people that needs his help and also writes about other home loans for people with bad credit such as equity loans.
posted by Debt Consolidation Loan at
7:15 AM
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