This is How to Take Advantage of an FHA Loan
Three Very Important Facts About FHA Loans
FHA loans are some of the best options for buyers who may not have perfect credit. It is also a good idea for buyers who may have trouble saving up money for a down payment. Here are two important facts that you should know about FHA loans before making your decision.
The insurance that is carried with FHA loans is split into two different premiums. These are required on every FHA loan. The first is known as an upfront premium. It is equal to 1.75% of the total amount of the loan. Once the buyer receives the loan, this premium is paid in full or added to the loan to be paid in installments.
The second part of the insurance is known as an annual premium
. Depending on the length of the loan, the percentage rate can either increase or decrease. Keep in mind that even though this is labeled as “annual”, it would actually be paid per month.
Another fact about FHA loans is that there is an extra offer available for qualified buyers. It is called a 203(k) and can greatly help borrowers who plan on making repairs. The interesting part about this loan is that, unlike most loans for repairs, this loan is based on what the value of the home will be after the repair work has been completed.
Lastly, borrowers who suffer financial hardships will still receive help. FHA loans are intended for those who need a little help, so when borrowers fall behind on their pays or may not be able to make the full payment, the FHA is willing to work with them to help get some relief.
There are many aspects of an FHA loan that you need to understand so you can make a wise choice regarding your home loan.