| If we really think about it, there are many reasons you | | | | much more difficult to get a loan if at all. |
| should ask for an FHA loan. Especially if you're a first | | | | So be sure you are building credit now, use a credit |
| time home buyer. Let's consider some of the best. | | | | card but pay it off each month. If you have student |
| Here are 5 good reasons: | | | | loans, this will work also, just be sure to keep your |
| - Easier to qualify for the loan | | | | payments on time. The same goes for medical bills. |
| - You do not need perfect credit | | | | You cannot have more than 2 accounts that are over |
| - Very low down payment | | | | 30 days late in the past 2 years. |
| - Costs are lower | | | | Very Low Down Payment |
| - You keep your home | | | | So again, what ask for an FHA loan? How about the |
| Ok, now we can look at these in greater detail. Then | | | | low down payment of just 3.5%? To top that off it |
| you can see why asking for an FHA loan may be | | | | can be a gift from your parents or a charity. Only FHA |
| your best option. | | | | loans allow this as far as I know. |
| Easier to Qualify For the Loan | | | | There are many ways to work at raising this money. |
| FHA is not the actual lender. They are a government | | | | You either save it yourself, get a gift from the parents |
| run program that insures the lender that they will get | | | | or have a charity give it to you. I know what you're |
| their money if you do not pay. So they have less risk | | | | thinking, how do I get a charity to give it to me. Well, |
| than a conventional loan. A conventional loan is | | | | that's for another article. |
| normally insured up to 90% of the loan amount (by a | | | | Costs are Lower |
| private mortgage insurance source) where as FHA is | | | | FHA loans offer great interest rates. Compare them |
| insured up to about 97%. | | | | to the conventional loan to see for yourself that this is |
| So it takes less for you to qualify since the lender is | | | | true. Compare the FHA interest rate with several |
| guaranteed by the United States Department of | | | | lenders and you may find some that are lower. |
| Housing and Urban Development (or HUD) that there is | | | | You may find it just a little above the conventional loan. |
| no real risk to the lender so they will be more likely to | | | | For example if the conventional loan is 6% the FHA |
| take a chance on borrowers with less than perfect | | | | loan may be around 6.5%. |
| credit. This brings me to the next point. | | | | What you need to keep in mind is that FHA loan rates |
| You Do Not Need Perfect Credit | | | | have not varied much over the years. I bought my first |
| At one time, a few years ago you could get and FHA | | | | house in 1978 and my interest rate was 7.75%. |
| loan with no credit scores at all. This was great for | | | | You Keep Your Home |
| borrowers who had not established credit in the | | | | HUD does not want your house back. They want you |
| conventional methods. However you could still use | | | | to stay in it until you pay it off or sell it. That's why they |
| alternative credit like rent, cell phones, utility bills etc. | | | | insure the loan to project the lender ad you. Since 1934 |
| Now FHA wants you to have a credit score of at | | | | they have been doing this and it's a good bet they will |
| least 580-620. If you do not have a score it will be | | | | continue to do so. |