House Finance Loan – When FHA adds some ease for borrowing money

by Christopher Meloni

The house loan finance industry has seen a lot of ups and downs in the recent past and seems to be in a delicate place right now. With its fragile state home loan providers would find themselves in a vulnerable state had it not been for the Federal Housing Administration (FHA) loan. This is a government undertaking of the U.S. Department of Housing and Urban Development. Borrowers who have the FHA loan are enabled to pay for a mortgage insurance which covers the lender for any possible loss or default in payment by the borrower. This FHA loan has empowered lenders to offer attractive rates coupled with less rigorous qualifying criteria.

FHA house loan finance borrowers normally requires credit scores depending on the type of loan that is asked for but it should not be less than 580. Those who do not have the required score may find themselves unable to borrow better than 90% loan-to-value. If, in case, you have a score that is less than even 500 you will not be eligible for a loan. However, there are exceptions to the rule where individuals with insufficient credit may still be allowed to get FHA loans if they meet certain criteria or fall under certain circumstances as laid down by the Federal Housing Association.

If you qualify for a FHA loan, you may be required to pay 3.5 percent of the total price of the house as down-payment which is not a very big amount and hence is quite an attractive feature for borrowers. Borrowers should not have to borrow this down payment and may be able to give it out of their own savings. If not, they may also like to take help from a government program for down payment. The FHA loan also lets builders, sellers as well as loan providers to contribute towards a borrower’s closing costs in the form of appraisal or title expenses. However, if lenders contribute anything towards the closing cost of the borrower, they usually charge a higher rate of interest and it is up to the borrowers to compare rates and find an option that best suits their house finance loan requirements.

Borrowers must remember that FHA is only an insurance fund and that they will have to get it through an approved lender. In addition, borrowers must also know that not all FHA-approved lenders offer the same rate of interest. Although there are other loans available besides the FHA loans but they may require larger down payments. Borrowers may still like to check out other options and see if they can find a better rate than FHA loans which may be a difficult task as experts believe that FHA loans are the best kind of insurance loans one can find.

The FHA loan has a special feature called the 203(k) that allows borrowers to have some extra money if they need it for additional things like repairs and the like. This is definitely an added advantage if there is painting needs or any other nonstructural renovation.

Summary: House finance loan has been made a little easier by the FHA loans, although there are still qualifying criteria that needs to be met. Find out how you can benefit from an FHA loan.

Author’s bio: This article has been written by Kevin Maddox who’s an expert on how to get quick cash loans. His main area of expertise happens to be various kinds of loans like the personal ones and how they can help in case of adverse situations.