San Diego, CA (PRWEB) December 11, 2013
LoanLove.com is a borrower advice website that is “NOT another boring, stuffy, "fall asleep in your chair" site about loans.” As a trusted destination for current news and expert loan advice, the website empowers home owners with first class knowledge, valuable resources and connections to top rated industry professionals. With highly valuable, informative and entertaining articles the Loan Love team’s aim is to help borrowers find loans that they will love. Recently the website has published a number of loan guides that outline the basics of some of the most popular loan types. One of these is an FHA loan guide which can be very helpful for any borrowers who are considering utilizing these types of loans.
The Loan Love article says, “So, you say you want to buy a home but you can only afford a small down payment? If you have good credit (not necessarily perfect), an FHA mortgage could be your ticket to home ownership. An FHA mortgage is a mortgage that’s been guaranteed (i.e., insured) by the Federal Housing Administration. The actual loan is made by a bank or other traditional mortgage lender, but FHA underwriting means the lender won’t be left on the hook if the borrower defaults. It’s easy to see, then, why FHA loans are popular with lenders – there’s a lot less risk. But why are they popular with homeowners?”
Loan Love goes on to explain that some of the main FHA loan benefits include:
- Low down payment, as noted in the previous quote.
- The fact that some FHA loans are assumable, which could make it easier for the buyer if they plan to sell their home down the road.
- FHA 203K loans are useful for borrowers who plan to make improvements on the home they are buying, as they allow buyers to take out a single loan to fund both the purchase and home improvements.
These can be some very attractive advantages for first time-home buyers and those with lower incomes, most notably. However, there are some disadvantages to FHA loans, as there are with any type of loan. Loan Love lists the main ones:
- “FHA loans usually are not available for very expensive properties and the amount you’re able to borrow will depend on whether the FHA considers the area to be a “high cost” or “low cost” neighborhood. Other loan products are usually more flexible in the amounts you can borrow.
- You’ll need to pay a mortgage insurance premium at closing (currently 1%) and an additional mortgage insurance fee with the first 60 monthly payments (right now, 0.85%-0.90% annually); these fees help mitigate potential losses the FHA might face when borrowers default.
- Interest rates may be higher than standard loans, especially for buyers with top-notch credit.”
Like any loan product, the borrower needs to their homework in order to determine what is best for them. While an FHA mortgage might be the ideal solution for some buyers, if the borrower has good credit and a decent down payment saved, it might be more to their advantage to look at some other loan products that offer lower interest rates or do not require mortgage insurance.
For more information, please visit LoanLove.com.