FHA loans were previously a very attractive option for those who wanted to become first-time home buyers, but did not have the resources to make a sizable down payment or the funds to afford higher interest rates. The real estate industry has changed greatly over the past several years, making them less desirable than before. Still, there may be hope for some who want to become home buyers but are having difficulty getting started. The key is arming yourself with the right knowledge and information, and Dean Graziosi can help you do just that.
FHA loans offer options for borrowers that aren’t offered by private lenders. One example of this is the required down payment. If you obtain a conventional loan, you will be required to pay at least ten percent down. An FHA loan, on the other hand, only requires somewhere in the neighborhood of 3.5 percent. Some private lenders will allow a smaller down payment, but only if the borrower has except credit and a sizable income.
FHA loans also come with lower interest rates and don’t carry a prepayment penalty. If you are considering an FHA loan, however, there are important factors to be aware of before choosing this option.
At the origination of the loan, the borrower may be required to pay a one percent fee. This is in addition to extra insurance payments which would be dispersed throughout the course of the loan. Also, the appraisal process can wind up being much stricter than it would be with a conventional loan. Before deciding an FHA loan is for you, consider all the costs you could incur. Find out what all your options are and talk to a mortgage expert about FHA loans.
You can also avoid financial difficulties by taking a few steps of your own. Pay off all bills possible before purchasing a home. This will leave you with more money each month and will help when you are required to pay those extra fees.
Pay off your credit card debt. This is extremely important when it comes to the loan approval process. It will even help you qualify for a conventional loan. It will also mean you have more money in the bank at the end of each month.
Know what you are getting into before taking the plunge. Saving additional money will enable you to take care of those extra costs relatively easily. As an article posted on the Freedom Mortgage Blog points out, becoming a home owner is a very important step and should be a part of your overall financial planning.
Owning a home is exciting, but as Dean Graziosi advises, choosing the right loan is extremely important. Learn as much as you can about your options. Remember, you will be paying it off for a very long time, and the easier that is to do, the more you will enjoy living in your brand new home.