Have you always dreamed of owning your own home? There's nothing better than knowing that your home is yours, and you're free to enjoy it as you please. For many people though, they feel as though this is nothing more than a dream. With Pompano Beach FHA Loans though, you may be able to finally stop renting and buy your very own home. Here's how.
The History Of The FHA Loan
In 1934, the housing market was in a slump thanks to the Great Depression. People weren't buying homes, and so the Federal Housing Administration, or FHA, chose to step in. They told private lending companies that they would provide insurance when they gave loans to people with poor credit or with little savings. That meant that private lenders were much more confident in lending to those who fit this criteria. Thanks to the FHA's assistance, the housing market recovered and people who thought they'd never be able to buy could get their dream home.
What Is A FHA Loan?
An FHA loan is a loan based on the principles of the FHA in the 1930's. The loan is designed for those with poor to medium credit, or for those with little savings who aren't able to put up a large amount of money upfront.
The loan is insured by the FHA, making it less risky for a lender to lend to someone with poor credit. If the borrower defaults on their payments, the FHA will step in and cover them. That way, the lender isn't at risk of losing money.
Who The FHA Loan Is For
If you've always wanted to buy your own home, but you think your credit or earnings would stop you from doing so, an FHA loan could be for you. These loans are designed to help people like you into home ownership, so they're well worth looking into.
These types of Pompano Beach Home Loans are also perfect for people who don't have any credit at all. If this sounds like you, then a lender would look at other evidence, such as utility bills, in order to consider you for a loan.
How The Loan Works
When you apply for an FHA loan, you'll need to meet certain requirements. These include:
- A credit rating of 580 or higher
- A 3.5% down payment, or 10% down payment if your credit score is between 500 - 579
- Documentation of income, such as pay stubs
- The loan must be for your primary residence, rather than a second or vacation home
- Your CAIVRS check must come back clear
If you meet these requirements, then you can be approved for an FHA loan. When you set up your repayments, these will include a Mortgage Insurance Premium, or MIP. These MIP payments will be used in case you default and the FHA need to step in.
You'll also find that your lender may offer to help cover certain fees, such as your closing costs. It's worth asking what they can do for you, as it can help the house buying process a lot easier on you overall.
The Benefits Of An FHA Loan
There's a few reasons why you should consider an FHA loan. The first and most important reason is that it can give you a shot at owning your own home. If you have no credit, or poor credit, you may have felt that you had no chance at buying at all. FHA loans give you the chance to get on the property ladder.
Also, using an FHA loan means that you'll find it easier to find a lender that will work with you. As you're looking for this kind of loan, you'll be of lower risk to the lender, and so they'll be more likely to offer you a deal.
What To Know Before You Take Out The Loan
Of course, you still need to exercise caution before you go ahead and take out that loan. Firstly, just because the lender has given you the loan, you can't be complacent. You still need to ensure that you're able to make the payments every month. Ensure that you'll be earning enough to be able to cover your costs, and keep up with your repayments.
As you can see, an FHA loan can actually be the key to you owning your own home. If you never thought you'd be able to, it's a good idea to meet with a lender. You may buy your own home after all.