Why Coral Springs FHA Loans Might Be For You
Are you living in the Coral Springs area and have a less than perfect credit score or do not have enough money to make a sizeable down payment, then you ought to consider Coral Springs FHA loans. FHA loans make home ownership easy for first-time buyers who usually do not have the best credit scores.
Despite this, FHA loans are not a perfect fit for all. This article will help you understand how an FHA loan works and how it can be of benefit to you.
Defining an FHA Loan
An FHA loan is a mortgage that is given by a private lender and is insured by the Federal Housing Administration, hence the name.
What this means is that in the event the borrower is unable to pay back their loan, the United States government through the FHA will reimburse them on your behalf. The U.S government is unable to make the following number of items for the following reasons. The U.S Treasury finances the Federal Housing Administration.
Due to this guarantee from the American government, lenders are usually more willing to give substantial loans to borrowers who normally would not qualify for a mortgage.
Why You Should Consider Coral Springs FHA Loans
One of the major reasons why FHA loans are very popular with the masses is because they make it very easy for borrowers to become homeowners. The one thing to keep in mind though is that the advantages borrowers enjoy by getting an FHA loan come with tradeoffs.
Below is a breakdown of an FHA loan’s most attractive features.
Reduced Down Payment
The minimum required down payment for an FHA loan is 3.5% of the property’s value. When compared with conventional loans, this is significantly less. A conventional loan requires that the borrower have a minimum down payment of 5%. It is, however, cheaper for the borrower to provide up to 20% in down payment otherwise the lender will require them to pay monthly mortgage insurance premiums which no doubt increase the cost of the mortgage.
The same applies to FHA loans as well but the reduced down payment helps ease some of that burden.
Gifted Down Payment
Another factor that makes FHA loans very popular is the fact that the borrower can get the down payment from other people if they do not have the available funds. They can also get money from friends and family to help with closing costs.
In addition, FHA loans make it possible for the seller to pay the closing costs of the buyer up to 6% of the loan amount. If you are a seller, you can use this to incentivize buyers to buy your property. As a buyer, you can adjust your price to get sellers interested in your offer.
Unlike other loans that will penalize borrowers for paying their entire mortgage before the repayment term expires, FHA loans carry no prepayment penalties.
FHA Loans Are Assumable
Coral Springs FHA Loans are assumable. What this means is that if you are selling your property, the buyer can continue paying the mortgage from where you left off. This can be used to entice buyers as it will be cheaper for them. This is because a couple of years after taking the mortgage you will be paying a lower interest rate and those savings can be passed on to the buyer.
An Opportunity to Rebuild
If you have recently come out of foreclosure or bankruptcy you will find that getting an FHA loan is much easier than getting a conventional loan. This is made possible by the government’s guarantee. You can qualify for an FHA loan 2 or 3 years after going through a bankruptcy or a foreclosure.
FHA loans are versatile as they can be used for more than one purpose. For instance, the program can be used to finance home improvement projects. If the home you are thinking of purchasing needs upgrades, then an FHA 203K program would make it easy for you to qualify.
How To Qualify for an FHA Loan
When applying for an FHA loan you need to remember that lenders usually have more stringent guidelines than those highlighted by the FHA. At NHL Lending, we have comprehensive guidelines that are designed to make it easy to get Coral Springs FHA loans.
It is advisable you get in touch with one of our loan officers to know for sure if you qualify. Sometimes, even if the borrower does not meet all of our criteria, there are certain mitigating factors we consider.
Get in touch with NHL Lending by visiting our offices.