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started by Lee Cooper on 16 May 12
started by Lee Cooper on 16 May 12
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started by Lee Cooper on 16 May 12
Here in Denver, we advise all first time home buyers to become familiar with and evaluate the FHA mortgage program. Its not a universal fit, but many first time home buyers receive incredible benefits from the FHA program. Chiropractic Naperville, back pain Naperville
Key Facts About FHA Mortgages
FHA is short for Federal Housing Administration. The FHA is in business to encourage home ownership in the US and has programs to help people get into their first homes. FHA programs enable banks to lower their credit standards and downpayment requirements, permitting many people to purchase their first house. Lenders participate in FHA programs because the federal government stands behind the loans. Banks who participate in FHA programs know that if a loan goes into default they will be able to recover their investment, thus reducing their risk.
Who Can Get a Denver FHA Mortgage?
In addition many conventional mortgages require a downpayment of up to 20%, FHA only requires 3.5%. FHA does require that applicants have an acceptable debt to income ration to prevent overbudoning them. Chances are, if you cannot qualify for a FHA loan you will likely not qualify for a conventional mortgage. Even if you do not qualify now, don't give up. If you work with your loan officer and correct your shortcomings, you will be in your new house before you know it.
More FHA Benefits
As well as a lower down payment and lower required credit score, there are other advantages that come with having a Denver FHA mortgage such as:
No prepayment penaly. A huge bonus for subprime applicants.
The FHA 203k program will fund specific home improvement efforts, allowing you to buy a house that may need some repairs without having to come out of pockt for the repairs.
FHA is much more willing to accept money you get as a gift to make your downpayment or cover closing costs.
* "Assumable" in certain circumstances, which means it can be taken over by someone else.
So, Why Would You Not Choose An FHA Loan?
The FHA places a limit on the maximum loan amount based on current local market values. In Denver, the current maximum loan is $406,250. Additionally, on April 9, 2012 FHA started requiring PMI (private mortgage insurance). PMI is 1.75% of total loan amount at closing and 1.15% yearly (divided into 12 monthly payments) for the first 5 years of the mortgage.
PMI is required to permit the FHA to require less down and a lower credit score. The insurance that PMI provides allows the FHA to keep its acceptance criteria attainable for most people. It may or may not be required with a conventional loan.
FHA Loans Are The Fastrack To The American Dream Of Home Ownership
Prior to the FHA's creation most people could not afford to buy a home until they were much older. This would now be considered unacceptable to Americans. People starting out just could not come up with a 5, 10, or 20% downpayment and achieving a 700+ credit score is hard, especially for people just starting out. The reduced standards of FHA mortgages have changed the American experience and allowed millions of Americans to fulfill their dream of home ownership.