FHA mortgages are great for people looking to purchase a home and current homeowners who want to refinance their mortgages. With all of the advantages this type of loan offers, borrowers can finance their homes and save money in the process! A low down payment requirement and competitive rates leave borrowers with more money to spend on other expenses.
Easy to Qualify
The Federal Housing Administration (FHA), which insures these usda loans texas, does not have strict income or credit score requirements. The FHA only considers the preceding twelve months of a borrower’s credit history to determine if he or she qualifies, though most lenders still require a minimum credit score of 620. So, an applicant with a troubled financial past can qualify for this type of financing if he or she has had no delinquent payments within the last twelve months.
Low Interest Rates
Because the FHA insures this loan, lenders can offer lower interest rates than on other home loans Houston. A homeowner will save money on his or her monthly mortgage payment when he or she has a low interest rate and, over time, can end up saving thousands of dollars in interest!
Low Down Payment Requirement
This type of financing is great for first-time homebuyers who may not have a lot of money or who have yet to build up their credit histories. Compared with other home loans, this loan has a fairly low down payment requirement. Typically, the FHA requires a down payment of 3.5% of the purchase price of the home. By paying less money out of pocket, first time homebuyers can have more money to cover the other expenses associated with buying a new home.
With the rate/term refinance mortgage, a homeowner can change the rate and/or terms of his or current mortgage. If current interest rates are lower than when the homeowner took out the original mortgage, he or she may be eligible to receive the lower interest rate. Homeowners can also switch from an adjustable mortgage rate to fixed rate. This change can end up saving the homeowner thousands of dollars over time because the rate will no longer fluctuate. The length of the mortgage can also be changed, if desired.
With the cash-out refinance mortgage, a homeowner can receive cash back by refinancing his or her mortgage. The homeowner would take out a loan for a higher amount than his or her current mortgage and receive whatever is left over after paying off the existing mortgage. There are no restrictions on how the cash is used. The funds can be used to pay for home repairs, medical expenses or other expenses.
There is also a debt-consolidation refinance mortgage. This FHA mortgage allows homeowners to combine some or all of their debt into one monthly payment. This not only makes it easier to pay off the debt, but it also saves the homeowner a significant amount of money in interest and tax savings.
Finance Now Before FHA Guidelines Change
The FHA plans to implement a few guideline changes very soon. Some of these changes include an increase of the mortgage insurance premium, as well as an increase in the down payment amount for borrowers who have credit scores below 580. Interest rates are also subject to change daily, so now is a great time to see what an FHA mortgage can offer you.