subject: FHA Home Loans – Better Options For Colorado Buyers [print this page] FHA Home Loans Better Options For Colorado Buyers
FHA home loans are cost-effective, affordable and government granted loans. Although, everyone knows about an FHA loan, but they often wonder why one would prefer an FHA home loan over any other loan. Therefore, you need to have knowledge regarding their benefits.
Fairly Low Interest Rates
Federal Housing Authority (FHA) intends to make housing more affordable for people and thus, these FHA home loans are less expensive than the conventional Fannie Mae / Freddie Mac home loans. The interest rates on an FHA home loan are generally 0.125 to 0.25% better than conventional loans.
Flexible Requirements
Some of the important aspects required to get an FHA loan approved are as follows:
Unlike traditional lenders who do not lend you without a sound credit history, FHA has relaxed many credit history requirements and also grants loans to individuals who have experienced bankruptcy or any other event that might influence the credit history. However, it does require you to provide necessary documentation.
For an FHA home loan, minimum down payment of 3.5% of the purchase price is required. It also requires you to pay periodic mortgage insurance premium as well as an upfront mortgage that can be financed into the mortgage.
Also, one important factor with an FHA Loan is that the house or property must fulfill FHA standards. Properties that do qualify for the FHA loan are usually one-to-four unit structures and the applicant must be currently residing in the property as its prime residence. Moreover, all lenders have different eligibility requirements and before confirming a deal, it is necessary to confirm with your lender.
Home Appraisal
Initially, the FHA appraisal was required by regulations to bring to notice anything in the property that needed to be repaired and the clients had to fix the house before the deal was closed. However, since the last year, these requirements are no longer applicable and the applicants might not need to repair their house before closing.
Non Allowable Costs
Previously, the sellers had to pay non allowable costs or specific closing costs. These costs raised the cost of obtaining a loan and were usually more than $1000. However, recently, these requirements are no longer applicable and the seller is required to pay a small fee.
Fora potential buyer, an FHA home loan is very suitable, however, pre-requisites for getting such a loan should be kept in mind before making a deal. Moreover, the firm that helps you get an FHA loan should be an FHA specialist who has significant knowledge about the real estate market in Colorado.
