All You Need to know about FHA Mortgage
Federal Housing Administration (FHA) loans are government-assisted mortgage plans that provide an alternative to conventional banking finance. They were originally introduced to help first time home buyers with an imperfect credit score. Since then, the FHA loan has acquired a wider audience - which even includes homeowners who are looking for refinancing.
FHA loans offer more flexibility, especially when it comes to credit score, income level, homeowners’ equity and down payments. This makes them one of the most preferred alternatives to fixed-rate and adjustable mortgages.
A typical FHA loan does not include any Mortgage Insurance Premium (MIP). Similarly, monthly mortgage insurance is not required. FHA loans enable several homeowners, who do not qualify for conventional loans, to purchase a new home or refinance an existing home. FHA loans offer the following advantages to a homeowner:
Less stringent qualification requirements
Loan guarantee regardless of the credit rating
A home equity or down payment of less than 20%
Benefits of FHA Loans
FHA loans provide one of the easiest ways to qualify for refinancing or for buying a home. The loan is issued by the U.S. Government and is appropriately insured to that extent. It gives the homeowner flexible choices. The loan allows you to:
Refinance up to 97.75% of the primary value of your home; and
Buy a new home with down payment as little as 3.5%
How it Works
The actual payment, on account of the FHA loans, will vary, depending upon your current situations and the prevalent market interest rates at the time of loan application. Once granted, you can easily pay off your mortgage at any time without any pre-payment penalties. The loan can be offered with 30-year, 25-year, 20-year or 15-year fixed rates or as a 5-year adjustable-rate mortgage. You can opt for either, based on your needs.
Refinancing your home with FHA loans is faster and easier when opting for a FHA Streamline loan. It requires no potential appraisal. To learn more about the loan and its requirements and benefits, contact the mortgage banker at RedRock Mortgage today!