Buying a home for the first time can be an exciting experience, but it must be something that is done with a lot of thought. Should you end up choosing the wrong type of mortgage to finance your home loan, you could end up losing thousands of dollars over the course of the loan. FHA mortgage loans are secured by the Federal Housing Administration. About one in five home buyers in the United States choose an FHA loan to finance their mortgage. If you are in the market for a home loan, here are some of the reasons you should consider an FHA loan.
Low Down Payment
FHA loans are very popular among first time home buyers. In fact, about 75% of FHA loans are held by first time home buyers. One of the biggest reasons for this is because of the low down payment. Many first time home buyers do not have a whopping amount of cash available to put down on a home. With conventional loans, you may be asked to put down up to 20% of the home price. For those who do not have 20% to put down, an FHA loan requires very little money to secure the loan. In most cases, you can actually put down as little as 3.5% to get the loan. This allows first time home buyers to purchase a home with very little money down so they can get into a home faster.
Flexibility of Lender
Another great benefit of choosing an FHA loan is that there are so many type of lenders available to choose from. When you are ready to apply for an FHA loan, you do not have to specifically go to a bank to get the loan. Instead, you can choose from options like credit unions and savings and loan institutions. Having more options of lenders allows you to shop around for your mortgage to ensure you get the best rate possible.
More Closing Costs Covered
Closing costs can be a pesky part of the mortgage process. Not only do you have to worry about the sale price of the home, but you also have to pay closing costs. Conventional loans will allow the seller of the home to pay up to 3% of the closing costs, but an FHA loan will actually allow a seller to pay the full 6% of closing costs. This added benefit could mean the difference between getting the right home within your budget or losing your dream home.
To learn more, contact a company like First Mortgage Company, Inc.