How You Can Buy a Home in Chandler Arizona with a FHA Loan

Owning a home in the Arizona is a possibility for anyone who has a steady income. One of the little known facts is that there are some government guaranteed loans that are targeted at very specific groups of people, and this widens the field for home ownership to a very wide group of people.

Banks offer specialized mortgage loans to certain groups of people. A good example of a loan that can be accessed by almost anyone is a FHA loan.

Understanding FHA loans

A FHA loan is a government-guaranteed loan that is offered to people who cannot access regular loans for reasons such as bad credit. If your credit was affected by the last financial crisis but you have since started to recover your finances, now may be the time to take advantage of a FHA loan.

One of the reasons why FHA loans are offered is to rouse the housing market into growth. As things stand now, the housing market is starting to pick up in areas like Chandler, Arizona, but most people are still hesitant about jumping back in.

FHA loans are attractive to lenders as they are insured. This means that should you fail to repay, the bank can recover its losses from the insurance company.

Below are some of the benefits you will get with a FHA loan:

1. You will pay a down payment of only 3.5% as opposed to the 20% required for regular mortgage loans. This is a big benefit as you don’t have to struggle to raise a large amount of money upfront.

2. If you can’t get approval for a normal mortgage loan, this is the best loan for you as FHA guarantees the loan.

3. You can sell the home even when you have not completed repaying the loan, and the buyer will shoulder the remaining mortgage.

4. You can get to own a home with a bad credit record, or even if you have previously filed for bankruptcy or undergone a foreclosure. The normal credit limit that banks use when giving mortgages is 720 and above. With a FHA loan however, you can get a loan with a score as low as 580, with a down payment of only 3.5%. You can also qualify with a score of 500, though you will be required to make down payment of up to 10%.

5. The property owner or the bank can cover some of the closing costs such as appraisal costs. Though this is done to encourage you to buy, this takes away your financial burden. If your bank pays the closing costs, you might get charged higher interest rates, therefore be sure you are okay with this before you allow the bank to cover such costs.

6. You can get extra money for repairs. Through a loan called a 203(k), you can get additional funds to repair your home.

7. If you have a FHA loan, you can get relief in form of lowered interest rates or extended payment period to ease off any financial burden.

With such a loan facility available, there is no reason why you shouldn’t buy one of the condos for sale in Chandler Arizona.`

Downside of a FHA Mortgage

1. One of the downsides of a FHA mortgage is that unlike the normal home mortgage loan, you will be required to pay two different types of home insurance.

• The monthly mortgage insurance, which is 1.75% of the mortgage given, is paid upfront or is paid as part of the mortgage at closing.
• The annual mortgage insurance is influenced by factors such as the size of the loan and loan repayment period. The insurance is calculated annually, but is paid in monthly installments as part of the loan.

Though you have to incur the above insurance costs, they are a far cry from what you would have had to pay upfront as down payment for a regular mortgage.

2. Another downside of FHA loans is that the home needs to meet the appraisal guidelines of FHA. This is however not a problem if the house you are buying is in good condition. Before you go too far in your loan processing, you should inform your realtor that you are buying your house with a FHA loan so that the homeowner makes the necessary renovations prior to inspection.
3. You can only get FHA loans through a bank that is approved by the FHA. This limits your choices especially if the bank you have already established a relationship with. Interest rates vary among different banks; therefore you have to research each bank before you settle on the one with the most preferable terms.

FHA loans are yet another way that you can own a home. As long as you have the capability of servicing monthly repayments, you can access a loan and buy your dream home.

About the author

David Kuttner is a photographer, writer, and a father. When he’s not busy writing, he’s most likely spending time with his wife and their two mischievous dogs: Lily and Bart. Read his views to learn more.