FHA mortgage home loans are insured by the Federal Housing Administration (FHA) which can make it easier for you to qualify to purchase or refinance a home. This mortgage loan option offers flexible qualification guidelines to help people who might not qualify for a conventional mortgage.
The Federal Housing Administration (FHA) was formed in 1934 to spur greater homeownership numbers in the U.S. and to facilitate home financing, improve housing standards and increase employment in the home-construction industry. FHA mortgage loans accomplish this through:
According to FHA guidelines, the FHA generally will not insure more than one mortgage for any borrower, noting an exception for transactions in which an existing FHA mortgage is paid off and another FHA mortgage is acquired. There are other exceptions as well. One of those exceptions is provided for relocations.
If the borrower is relocating and re-establishing residency in another area not within reasonable commuting distance from the current principal residence, the borrower may obtain another FHA mortgage and is not required to sell the existing FHA-financed property. Other exceptions may be approved when a family has increased in size or for a borrower who is vacating a jointly-owned property. Exceptions are processed on a case-by-case basis.
If you put down 10% or more as a down payment, you can wait for the FHA mortgage insurance to fall off your loan, which happens after 11 years. If you put down less than 10%, the only way to get rid of the monthly mortgage insurance payments is to refinance into either a Conventional or VA loan, if you qualify for either.
It depends! For people with better or more established credit profiles and low levels of debt, it may be advantageous to choose a Conventional loan over an FHA loan, even if the interest rate is the same or similar, due to other advantages associated with Conventional loans. For those who may not have as much established credit, a lower credit score or who may have slightly higher levels of debt, an FHA loan might be the cheaper option over the life of the mortgage loan, or it may be an entryway into a home loan for some who may not qualify for Conventional. As always, though, a mortgage loan officer will be able to go over your specific situation more closely in a phone consultation or online, and then advise which option would be advantageous for you.
An FHA 203(k) loan is a type of FHA loan that is specifically for bundling the costs of necessary renovations or home improvements into the mortgage loan at the time of purchase or refinancing. It is a great option for people who have found a home that needs a little love before it is 100% move-in ready. Or, some borrowers choose to take out an FHA203(k) refinance loan later, when certain updates to the home become necessary.
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