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What are FHA Home Loans and Why do they Matter?

Posted by Mark Taylor | Posted in Arizona FHA | Posted on 23-11-2011

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The FHA, or Federal Housing Administration, has the responsibility of promoting home ownership through various programs. The procedures usually require that buyers set aside a small down payment in order to purchase a home. This can come in pretty handy for potential buyers that are strapped for cash but cannot come up with the money in time.

What is an FHA Loan?

FHA loans are mortgage loans that are insured against any default by the FHA. These particular types of loans ensure that a lender won’t have to write off a loan if a borrower happens to default on it. In other words, the FHA will pay off the lender if the borrower does end up defaulting.

FHA home loans are the reason that many lenders are willing to provide potential buyers or borrowers with large mortgage loans. They haven’t got anything to worry about after all. The FHA has their back if a buyer happens to hightail it without paying off his/her debt.

Why Are FHA Home Loans so Convenient?

The fact that your loan gets secured by the Federal Housing Association is just one of the many advantages that come with securing an FHA loans Some of the many benefits include the following –

  1. The best part about these loans is that they only require you to put down 3.5 percent of the actual purchase price as the down payment. This is way better than the 5 to 10 percent down payments that conventional loans require.
  2. FHA home loans come with very low interest rates as compared to lower-down-payments conventional loan programs offer. You are charged less because the government backed insurance lowers any risk on the lender.
  3. The FHA accepts down payments from almost any source no matter whether your funds happen to be from charity, gifts or a down payment program funded by the city government. Most traditional loan programs insist that your down payments be from your own personal savings.

However, just because FHA loans make it easier for people to afford their mortgage does not mean that they are suited for every buyer.FHA loans can easily have your finances go belly up if you do not know what you are getting yourself into. Therefore its best that you make sure you determine where your finances stand up you decide to opt for one.

Getting with a good loan officer is important, to make sure you go over your budget, that you don’t max out your debt to income ratios and that you fully understand how all the mechanics of the loan work.  Remember just because you qualify for a $300,000 house and you have $10,500 saved doesn’t mean you should go and buy one at that price!

If you want to know how to get qualified and how easy it is please feel free to reach out to The Mark Taylor Team at 602-361-0707 and thanks for reading my article: What are FHA Home Loans and Why do they Matter?

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