If you are interested in qualifying for a federally insured mortgage
through the Federal Housing Administration, you could qualify for a
better mortgage going this route. Here is what you need to know about
FHA mortgage loans.
There are a variety of reasons for choosing
an FHA mortgage. If you are a first time homebuyer or an individual
with less than desirable credit, the Federal Housing Administration can
help you get the financing you need. FHA mortgage loans have different
lending criteria that allow lenders to provide mortgages at much lower
interest rates.
What is a FHA Mortgage?
A common belief is
that the Federal Housing Administration lends money for mortgages;
however, this is not the case, the FHA simply insures the mortgage
loan. If you qualify for an FHA mortgage your loan will come from a
commercial mortgage lender, and is guaranteed by the government.
Because your FHA mortgage is insured by the government you are less of
a risk for mortgage lenders; as a result you will receive a lower
interest rate.
How to Qualify for FHA Mortgage Loans
To
qualify for an FHA mortgage loan you must apply through the Federal
Housing Administration. The FHA will evaluate your credit; the agency
requires at least on year of on-time payments on your credit reports.
They may require your rental and mortgage repayment history before
approving your application. The FHA will also consider your
debt-to-income ratio in making their determination.
The advantage
of going though this scrutiny by the FHA is that you will have an
opportunity to explain any blemishes on your credit records. If you
have valid reasons for your financial difficulties the FHA will
consider your explanations before making a decision. You can qualify
for FHA assistance as soon as three years after having a foreclosure on
your record. You will be required to make a down payment on the
mortgage; however, this down payment amount can be as three percent of
the loan amount. Your down payment can come from a variety of sources:
non-profits, government programs, or family members can provide you
with the money for your down payment.
There
are limits to the FHA programs. There is a limit to the amount you can
borrow based on the region of the country you live. The FHA mortgage
may not qualify your for enough money, if this is the case you will
need to secure a second mortgage for the property.
Finally, you
will have to purchase FHA insurance on the mortgage. This insurance
amounts to 1.5% of the mortgage amount due at closing and a recurring
.5% due every year. This insurance can be financed and include in your
monthly mortgage payment.
Louie
Latour specializes in showing homeowners how to avoid common mortgage
mistakes and predatory lenders. For a free copy of "Mortgage Refinancing - What You Need to Know," which teaches strategies to find the best mortgage and save thousands of dollars in the process, visit Refiadvisor.com.
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Chicago Mortgage Refinance
