Many times, renting isn’t exactly a matter of choice that many people resort to. If you’ve looked around and have decided to buy a house through using an FHA loan, you’re in promising hands. Not sure about which FHA loan to get?
FHA Loan Types
There are several types of FHA loans to accommodate each borrower depending on their needs.
This fixed-rate mortgage loan is the most sought-after and common among other FHA loan types. Terms depend on the buyer, typically between 15 to 30 years. Compared to conventional mortgages, interest rates under this loan type are also considerably lower.
Also known as a “rehab loan”, the FHA 203(k) loan combines the cost of repair to the purchase price of the house in one loan. There are two types of 203(k) loans: (a) Limited, and (b) Standard. Limited is for repairs that will cost at least $5,000 and no more than $35,000. Standard, on the other hand, is for renovation and repairs that will cost at least $35,000.
A Home Equity Conversion Mortgage (HECM) is commonly referred to as a “reverse mortgage”. It allows people aged 62 and up to make use of their home equity while eliminate existing mortgages without moving away just yet. For those who don’t have that much savings in retirement, HECMS are perfect sources of tax-free finances to supplement their retirement.
One-Time Close Construction Loans
The FHA Construction-to-Permanent(C2P) home loan is primarily used to finance the development of the borrower’s home and mortgage into one single transaction with just one closing. After completion of the construction of the new home, the borrower is expected to convert the temporary loan financing into a permanent long-term fixed-rate loan. There are no additional costs involve nor an additional closing requirement.
What is an FHA?
Something not so many people understand almost immediately is that the Federal Housing Administration (FHA) does not originate nor extend mortgages themselves, nor do they fund these loan programs. Instead, they insure the loan against future default by the borrower, taking the risk away from lenders. That’s why they’re commonly referred to as an FHA-insured loan.
Created to help low income-earning and middle-class American citizens, FHA targets to continue the rise of homeownership by making the acquisition and home purchase more attainable to a broader number of people.
To know more about FHA loan programs, where to get them from, and how you can avail them, click the link!