Why Go FHA (Federal Housing Administration)?

If you have less than average income or your credit score is less than average, and you are looking to buy a home or refinance your home, a FHA loan is probably the answer. The Federal Housing Administration, generally known as "FHA", provides mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories.

There are multiple FHA loan programs available that will fit your exact need. Remember this; each program available carries the same traits, low interest rates, little to no money down and low closing costs. So it is time to take a look at some of the mortgage loan programs available from the FHA.

The FHA Home Purchase Program

This program is for borrowers who are looking to buy their first home or looking at buying a new home over their current home. The guidelines for qualification are minimal and this program allows you to buy the home with no money down. Multiple lenders qualify for the lending of FHA loans backed by the government. So, there are countless lenders available where you can start the application process for a FHA Purchase Loan.

The FHA Refinance Program

This program allows you to refinance your home to a far lower rate. You might see your interest rate drop 3 to 4 percentage points under your existing rate. Again, little to no closing costs, no down payment and a relaxed credit score requirement. Also, this program allows you to take cash out on the equity of your home. If you need cash to take care of repairs on the home, fix your car or to catch up on your bills, then you may want to look at this program. The next program does not offer cash back, but still has major benefits. 

The FHA Streamlined Refinance Program

This program allows you to refinance your existing loan into a new loan with a far lower interest rate. It is often referred to as the “VA to VA” loan because you are replacing one VA loan with another. There is very little paperwork involved with this loan program, which saves time and money while you are waiting for the closing date. Again, the pre-qualification requirements are minimal, and the credit score requirement is relaxed. However, there is no cash back allowed with this program, you are only allowed a straight refinance of your current mortgage to a new mortgage. The goal of the program is getting an even lower interest rate with lower monthly payments.

Conventional vs. FHA Loans

The difference between the two loans is quite obvious. It is quite simple actually; no conventional loan program allows you to obtain financing with little to no money down. Closing costs are far higher, and the pre-qualification requirements are far more extensive than FHA loans.

Every situation is different when it comes to FHA qualification. Keystone Realty USA has professionals on staff that can help decide if an FHA loan is for you. Our mortgage consultants have been in business since 1979. In their 24 years of service to the residential and commercial markets, they have placed millions of dollars in loans, frequently closing loans which had been considered hopeless possibilities. Contact us today if you are considering FHA qualification or if you are thinking about purchasing a property.