It seems with this whole credit crisis lately, people are afraid if they have “bad” credit they cannot be approved for a mortgage loan. Especially, the current home owners who are in an adjustable rate mortgage and their payment is about to increase.
In a nutshell, the FHA (Federal Housing Administration) loan is insured by the federal government for the purpose of helping lower income and less than perfect credit borrowers qualify for a mortgage loan. It is most known to help first time home buyers that have little to no money down when buying a home. Also, many people don’t realize that even someone with a middle 500 credit scores can be approved!
Here is a government website link.
Below I’ve listed the benefits an FHA loan has for the first time home buyer and the existing home owner trying to refinance:
FHA Benefits For First Time Home Buyer & Existing Home Owners That Want to Refinance:
- Little or no money down for the down payment.
- You don’t need much credit history. Example: a college student that doesn’t have bad credit, but just minimal credit history.
- There is no minimum credit score to qualify.
- Low interest rates that can compare to regular rates people get with good credit!
- Lower PMI (private mortgage insurance) than your standard mortgage insurance someone would pay with less than 20% as a down payment.
- If you wanted to buy a home and use the equity to remodel the home right away, an FHA loan is also the best option for that.
So, if you know someone having trouble financing their first mortgage or refinancing their existing mortgage, have them contact me. Keep in mind not all banks and mortgage companies are licensed to do FHA loans. This may be the reason another company couldn’t help out.
