FHA Insured Loan
Just what is a FHA insured loan? When you're in the market for a house, a FHA insured loan might be the best fit for you, but only if you know what this loan entails for you.
FHA insured loans aren't like every other home loan, though they often act in a similar manner. Just like a traditional loan, a FHA insured loan will help you purchase a home, but they will also allow you to do so in the more budget friendly way.
People who are ideal for FHA insured loans include those who are first time home buyers, those who don't have a lot of money for the down payment, those who might be worried about qualifying for a loan, those who want to keep their payments low and consistent, and for those who might not have the best credit rating.
The FHA insured loans have a number of benefits for those who do decide to try this loan process. These loans are low in cost because the internet rates are lower, resulting not only in lower needed down payments, but also in lower interest rates. In addition, if you have troubles paying or your loan in the future, the Federal Housing Administration will work with you to help you avoid foreclosure.
The home can be a condominium or a manufacturer home, or you might choose to purchase a new home or refinance your existing one to four unit home with the help of the FHA.
There are a number of different kinds of loans you might be able to procure from the FHA.
Many people are confused about why FHA insured loans are better to use for their home purchase. After all, aren't subprime mortgages the same thing? In a word: no. Subprime and adjustable rate FHA insured loans do work in the same way, but with a subprime mortgage, the interest rate can go up dramatically after the initial period, making the loan impossible to pay off.
- Fixed rate - These loans will set an interest rate which will remain consistent.
- Purchase/rehabilitation - If the home you buy seems to need a bit of work, this is the loan for you to help you fix up the home.
- Adjustable rate - When you don't have a lot of money to spend, you will want to look to an adjustable rate mortgage that is low at first, but then the interest rate goes up over time.
- Native American or restricted areas - Those living in certain areas can also refinance or buy a home with the help of the FHA.
With a FHA insured loan, this is not the case. The interest rate will go up, but not at the same rate that a subprime loan might.
One final thing to keep in mind is that when you buy a home with the help of a FHA insured loan, you will need to purchase mortgage insurance as well, but this is often the case when buying a home.