Whether you’re a first-time buyer or a seasoned real estate investor, getting the best mortgage rate possible is a vital consideration. At Primary Residential Mortgage, it’s our goal to get the best available option for you and your family.
One such option is an FHA loan. “FHA” stands for Federal Housing Administration, and these are loans that this government organization covers with federally-backed guarantees. Rather than you, the borrower, mortgage insurance is covered by the government. There are several other great benefits of FHA loans – let’s look at a few.
Rates and Credit Scores
Everyone wants a good mortgage rate, and you’ll get one with an FHA loan. A credit score of 660 will qualify you for an FHA interest rate equivalent to what a score of 740 would have gotten you in a conventional loan format, normally a sizable difference in credit scores.
There are several requirement areas where FHA loans are far less stringent than other popular loan formats. The first of these is credit score, for which requirements are far lower across the board
In addition, you’ll also pay a much lower down payment – as low as 3.5 percent in some cases, compared with the standard 20 percent for conventional loans. There are no prepayment penalties, and we may even be able to offer down payment assistance if you’re in need of it.
Because of their flexibility, FHA loans are often used for refinancing projects. In many cases, you can finance nearly 100 percent of your home in these situations.
Closing costs are often a large expense, but this can be reduced with FHA loans. FHA loans allow the seller to pay up to 6 percent of the buyer’s closing costs, double the normal amount allowed.
An “assumable” loan means that buyers are allowed to take over an existing loan instead of taking out a new one. This is another area of flexibility, one that allows the buyer to choose the best option – either assuming the old loan at the same rate, or getting a new loan with a better market rate available. Since there are no penalties here, the choice is usually simple.
To learn more about FHA loans, or any of our mortgage services, speak to the brokers at Primary Residential Mortgage today.