| Overview | | | | increasing. |
| FHA loans are a great option for individuals who are | | | | Homeowners who have an FHA loan can lower their |
| either purchasing a new home or refinancing their | | | | interest rate any time the market improves with a |
| current home. Because these loans are insured by the | | | | streamline refinance, which requires less |
| Federal Housing Administration (FHA), borrower s have | | | | documentation and processing than other refinance |
| access to lower interest rates than may be available | | | | transactions. |
| to them on other types of home loans and can feel | | | | When borrowers refinance, they can lower both their |
| secure knowing their loan terms will never change. | | | | rate and monthly payment. If rates have decreased |
| FHA loans have a low down payment requirement | | | | since the original loan was taken out, even |
| (3.5% of the purchase price) and they allow | | | | homeowners with a fixed rate can receive a lower |
| homeowners to finance a large percentage of their | | | | rate with the streamline refinance. Lowering the rate |
| home's value, allowing them to either receive more | | | | on a home loan frequently results in not just long term |
| cash back from a refinance or save money on a | | | | savings, but lower monthly payments, as well. |
| down payment for a purchase. | | | | Eligibility Requirements: Credit and Type of Ownership |
| The FHA does not require high credit scores, so it is | | | | To be eligible for an FHA home loan, the borrower |
| easier for individuals to qualify for this type of loan than | | | | must be financing the home that is his or her primary |
| most others. | | | | residence. The FHA does not require that borrowers |
| Competitive Interest Rates, Even for | | | | have high credit scores, but most lenders want |
| Less-Than-Perfect Credit | | | | borrowers to have a credit score of at least 620. In |
| Because these loans are insured by the FHA, they are | | | | addition, there can be no delinquent mortgage payment |
| considered by lenders to be a reasonably secure | | | | reported within the 12 months preceding the loan |
| investment. The insurance reimburses lenders for any | | | | application. |
| outstanding balance in the event that the borrower | | | | If a potential homeowner has not built up a sufficient |
| defaults. This makes FHA lenders more likely to offer | | | | credit history, he or she can still qualify for an FHA loan. |
| their customers lower interest rates. | | | | These applicants will be asked to provide certain types |
| Although mortgage rates constantly fluctuate and | | | | of alternate documentation in order to prove their |
| depend upon current mortgage market conditions, they | | | | ability to consistently make payments. |
| are usually low compared with other types of loans. If | | | | While not every financial product is right for everyone, |
| borrowers choose a fixed rate for their FHA | | | | FHA loans have many benefits that make them the |
| mortgage, that interest rate will never change over the | | | | ideal solution to a variety of home financing needs. |
| life of the loan. | | | | Homeowners who feel they may be interested in this |
| With a fixed rate, the homeowner will always know | | | | type of financing should speak with an FHA loan |
| what to expect on their monthly payments and will not | | | | specialist to find out more about their options. |
| have to worry about rates or their monthly payment | | | | |