5 Ways To Get A FHA Loan For Your Dream House
The mortgage rates have become very high over the past few years. There is no guarantee for that they will continue to fall. The financial crisis has taken its toll on the market. So, now the question is how can we stay out of it. The answer is through FHA loans.
If you are searching for a home loan that has a low down payment and lower interest rate then the FHA loan is the right option. If you wish to learn more about the FHA loan then read this article.
What Is FHA?
Before getting into the main idea of FHA loan, let us discuss what it actually is. It is Federal Housing Administration loan which was created by the government of US in 1934. The purpose of this loan is to provide low-interest financing for qualified home buyers.
How Does It Work?
In case of FHA loan, you don’t need any security, the lender will give you the loan without the approval of any appraiser. They will evaluate the house for you and if everything is fine they will approve you to the program. You can get an amount of $0 to $6 million for a single family home and $500,000 for a manufactured home.
Who Can Qualify For This Loan?
This is a great benefit of the FHA loan. If you are looking for a low down payment, you can get it easily. People who are having a bad credit history can also get this loan. The qualification criteria is different for different states, you need to check for the specific requirements.
How Do I Apply?
As the FHA loan is not regulated by the Department of Housing and Urban Development, it does not have a centralized application process. If you are applying for a private lender, you should contact them directly. However, if you want to get the FHA loan, you will be required to go to the Department of Housing and Urban Development.
How Can You Make Payments?
The payments are not that high and they can be paid by using your paycheck or through a mortgage payment system. In most of the cases, the monthly payments are about 3% of your income.
As you can see FHA loan is a very useful way of financing your dream home. By applying this loan you will be able to save a large portion of your money and also get a low-cost home. It is easy to get this loan and if you search for a good lender, you will be able to find the best deal.
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How to apply for FHA loan?
The Federal Housing Administration is an organization that provides loans to people who wish to purchase a home. It works in collaboration with local and state governments and private lenders. People who wish to apply for the loan have to go through a series of procedures to know more about the loan. To know about the loan applications and the steps that you will need to take to apply for the loan, read this post and you will know more about it.
Types of loans
FHA Loan is a government owned loan that allows individuals to purchase a home. It is usually provided to people who don’t have the required money for the down payment.
Mortgage insurance is the most important factor that will decide whether a person will be eligible for the FHA loan or not.
The interest rates are lesser than the conventional loan.
Lenders can sell the property and repossess it if you default.
It requires a larger down payment and the borrower has to have some form of collateral.
Down payment is more than the conventional loan.
There are higher taxes associated with it.
Before you apply for the FHA loan, make sure that you have the following documents in your possession. They are listed below:
1. The loan amount you wish to borrow
2. Income proof
3. Proof of employment
4. Proof of assets
5. Bank statements
6. Pay slips
7. Tax returns
8. Documents that proves you are an active member of the society.