With mortgage rates at all-time lows, refinancing your home is a great financial decision. Even better? You can do so with a Federal Housing Administration Loan. After all, who doesn’t want to save money? If you’re looking to refinance your home, an FHA Loan is one of the best ways to do so.
The FHA stands for the Federal Housing Administration. This government-backed mortgage insurance agency grants loans to home buyers who fall within a specific lending criteria. These loans are available to all home buyers, even if you have a poor credit history. In this post, you will learn what you need to know about FHA Loans.
What Is An FHA Loan
An FHA loan stands for the Federal Housing Administration. Borrowers need to get approval from the FHA in order to receive one of these loans. Borrowers may qualify for an FHA Loan if they meet the following criteria:
- Your credit score is less than perfect
- Transunion has reported that a credit score of 519 is “poor.”
- Your credit report shows a payment history of two or fewer years
- This is key because it shows that you’re capable of making on-time payments and keeping your debt in good standing.
- You’re purchasing a single-family home
- This is to ensure that lenders will offer you a mortgage so long as you don’t live in a multi-unit property.
What Borrowers Need To Know About FHA Loans
The Maine FHA Mortgage requires that borrowers have a down payment of 10% for conventional loans. You cannot use a down payment assistance program to supplement this down payment. FHA does have a mandatory mortgage insurance program that is required to be taken out by all borrowers. This insurance is required to protect the lender in case you default on your home loan.
This insurance is paid for by the borrower, and is not included in the loan amount. The interest rate for an FHA Loan is either a fixed rate or a variable rate tied to the national mortgage interest rate. The FHA also has some unique requirements when it comes to appraisals and closing. Contact an FHA Loan expert to learn more and help you understand these aspects of the FHA lending process.
How Much Can You Borrow With An FHA Loan
The loan amount is determined by your income and debt-to-income ratio. – Your income and assets – This includes any income, property, stocks, bonds, and savings. – Your debt-to-income ratio – This is the amount of your current and past debts divided by your total income. This includes everything from mortgage payments to credit card balances.
In today’s low interest environment, refinancing your home loan is a smart move. An FHA Loan is an affordable option that allows you to take out a loan with little to no down payment. However, it’s important to do your research before applying for one. Those who are approved for an FHA Loan will receive excellent home loan terms, but they also need to meet certain requirements in order to qualify. Check it here for the best help you can get.