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There are several different options when looking into loans. However, FHA mortgage lenders have a bigger net when it comes to catching those who are looking for home ownership. This is because of the several types of programs offered by FHA mortgage lenders and the overall flexibility of the qualification process.
What Do FHA Mortgage Lenders Offer?
FHA mortgage lenders basically can offer you an FHA loan. This is a loan that is backed by the Federal Housing Administration. The Federal Housing Authority will guarantee these mortgage loans for certain conditions. This helps assist homebuyers with their purchases.
While the Federal Housing Administration doesn’t administer the actual loans they do allow qualified lenders and banks to disburse the loans.
What the Federal Housing Administration does do is back these loans in the case of borrower’s default on the loan.
What are the Advantages of Using FHA Mortgage Lenders?
There are several advantages when using FHA mortgage lenders. The most appealing of these, especially for first time homebuyers is the low down payments. Down payments can be as low as 3.5 percent. For those looking to buy their first home, especially those who haven’t been in the work force for that long, this can make a huge difference.
FHA mortgage lenders also can work with many different incomes and credit histories when it comes to potential borrowers. Those who have less than perfect credit can still qualify for a home loan.
While other mortgage lenders won’t allow anyone with less than perfect credit, FHA mortgage lenders open doors that might otherwise stay closed.
Even those who have bankruptcy or foreclosures on their credit history can qualify for FHA mortgages. While they may not be able to qualify for the same low down payment there is at least the opportunity of getting a home with a bad credit history.
Another positive aspect of FHA loans is the ability to pay off the loan early without having to pay extra fees. Many mortgage companies will penalize you for paying your loan off sooner and losing them interest, however FHA mortgage lenders will allow this without the extra costs.
What are the Disadvantages of Using FHA Mortgage Lenders?
There are two types of mortgage insurance borrowers must pay when taking out an FHA loan. In April of 2012 these will actual increase costing borrowers a little more money and increasing the standards in the qualification process.
There is a premium that is to be paid alongside the closing costs associated with buying a home, which is being raised to 1.25 percent of the loan amount. The upfront insurance associated with an FHA loan is being increased as well from one percent to 1.75 percent.
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