Wisconsin FHA Loans
If you are looking to buy a home, you likely have a lot of questions. The first should be where your financing will come from. For many, the answer to that question is the FHA home loan program.
FHA Loans in a Nutshell
FHA loans are loans that the government insures through the Federal Housing Administration. These loans still come from a traditional bank, but the government backing lowers the risk on the lender, thus making it easier to get one of these loans if your situation is not ideal.
Who Benefits Most from FHA Loans
While just about anyone who is financially stable enough to buy a house can use the FHA program, certain groups of people stand to benefit the most from it. These include:
First-time home buyers
Those with little (or no) money to put down on a home
Those who have less than perfect credit
Those who think they might not qualify under tightening lender qualifications
Those who want a low interest rate
Benefits of the FHA Program
So why should you consider the FHA loan program? Consider the following benefits:
Lower Cost – Because the government backs every FHA loan, the interest rates are low, even if you have a low credit rating.
Small Down Payment – You can get an FHA loan with as little as 3.5 percent down, and you can borrow that money from a friend or relative without penalty from your lender.
Easy Approval – While banks still have final say in whether or not you can get a mortgage through the FHA program, they are more willing to accept risky borrowers for FHA loans because of the government insurance.
Fewer Credit Hang Ups – If you have credit problems, including bankruptcy, you may still be able to get a loan through the FHA mortgage program.
Affordability – FHA loans charge a small insurance fee. Conventional loans also charge an insurance fee for any borrower who has less than 20 percent as a down payment. When compared to other loans for people in your situation, the FHA loan is likely the most affordable. With an FHA loan, buyers pay 1.5 percent of the purchase price at closing, followed by 0.5 percent annually.
If you are considering an FHA loan, take the time to compare it with a traditional loan with the same lender. After comparing all the fees, the interest rate and the mortgage insurance amount, you will likely find that the FHA mortgage is the best choice.