what is the advantage of having a FHA loan ?
i just want to know what a FHA loan has to offer as opposed to other loan types.
- Anonymous1 decade agoBest Answer
An FHA loan is almost as good as a VA or USDA loan. It carries an insurance premium that you pay that insures the lender carrying the paper against your potential default. These premium payments wind up in Atlanta and are disbursed as need be when various FHA loans are foreclosed on about the country.
Your mortgage pro, experienced in FHA loans, can explain the workings of it to you. FHA allows you to purchase with as little as 3% down payment. This money doesn't even have to come from you, it can be from a down-payment assistance program or other sources, ( not the seller).
Your FHA loan will not carry any kind of interest penalty for paying it off early, or before a specified time period. There are specific HUD guidelines that are adhered to and it is not unusual to be asked at a later date by a HUD official if everything was "done legally in your loan process."
In this time we're now experiencing, government type loans will become the choice of the day. One thing to realize about government type lending programs is that they all have their pluses and minuses, but over-all, they are geared toward the consumer, and it's pretty hard to get hurt by them unless there is outright fraud involved at the outset.
- 1 decade ago
FHA loans are qualified so that the lender gets insurance that you will be a good borrower. They are usually quite a bit cheaper (less interest) than non qualifiying loans. FHA also requires that the home be of a certain value relative to the loan so that there is less risk. The homes have to be inspected and pass a more rigorous inspection. All these things protect both the lender and the borrower.
- Anonymous1 decade ago
FHA Loan Benefits:
no to low down payment required (0-3%)
conforming rates for scores down to 580 (used to be 500)
streamline refi's (you dont have to 'refinance' if the rate drops, you apply to have your current mortgage streamlined to the new rate with barely any paperwork)
In other words, you can buy a house with poor credit and barely any money down thanks to FHA insurance.
Loan limits (just increased across the nation)
appraisals are a bit more strict and cost a little more