With mortgage rates being at record lows, many people are ready to purchase a home or refinance their existing mortgage. If you are one of the many Americans who want to take advantage of one of the best times in many generations to buy or refinance, you are probably weighing the loan options that are ready to you.
If you are a first-time home buyer or have not belief about your existing mortgage in years, it may be hard to tell which loan type will be the best for your situation.
approved Vs Fha Loans - Know Your Options
Two of the most coarse loans right now are conventional, fixed-rate mortgages & the government-backed Fha loan. Each loan offers unique features that advantage separate situations. Knowing some of the advantages and drawbacks of both loans will help make your decision easier:
Similarities between approved & Fha loans
* Both loans currently offer some of the lowest rates in history. 15-year approved fixed-rate mortgage rates are at an all-time record low. Fha rates are slightly higher but in general, rates are competitive and comparable.
* The most beloved Fha & approved loans are fixed-rate mortgages. That means the interest rates won't convert for the life of your loan.
* However, both approved & Fha offer Arms (adjustable rate mortgages).
Advantages of an Fha Loan over a approved Loan
* credit qualifying criteria not as accurate - credit scores as low as 580 now qualify for an Fha loan. Additionally, your permissible debt-to-income ratio is higher on an Fha. Meaning, if the number of debt you carry is relatively high compared to your income you may still qualify for an Fha loan.
* Low down cost required - Fha loans generally need as limited as 3.5% down on the purchase of a home. Government requirements also feature some of the lowest amounts needed to close a loan, potentially leaving more money in your pocket at closing.
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