FHA loans are ideal for first-time homeowners. Insured by the Federal Housing Administration, these mortgage loans are available to anyone who has a minimum credit score of 580 and can offer a down payment of 3.5 percent of the home's value.
While FHA loans do have their drawbacks, they are popular for a reason: They can be an excellent option for anyone who is having a hard time qualifying for a mortgage loan with good terms. If you aren't sure whether an FHA loan is right for you, consider the following facts as you narrow down your mortgage loan options.
Good Deals for Lower Credit Scores
While FHA mortgage loans are available to those who have a fairly low credit score, there are also benefits for those who have good but not excellent credit scores. For instance, if you take out an FHA mortgage loan with a credit score of 660, you will often qualify for the same interest rate a bank would have offered if you had a credit score of 740.
Assumable Loans
Most people don't take out an FHA loan with a plan to sell the house before the loan has been paid off. However, if you do have to sell a home before paying off your FHA loan, you can take comfort in the fact that the loan is assumable. This means that the person who buys the home can take on your existing loan rather than having to secure a new mortgage loan. Having an assumable loan on your home will make it far easier to sell quickly and at a good price than it would have been otherwise.
Help for Self-Employed People
FHA loan applicants are required to provide proof of employment for the last two years in order to get a loan. At the same time, the FHA also accepts applications from self-employed individuals, making it possible for those who do not have a traditional job to secure a mortgage.
If you aren't sure whether an FHA loan is your best option, get familiar with the requirements for obtaining such a loan. You may also want to explore other loan options to find the best deal. Credit unions such as Coosa Valley Credit Union offer great mortgage loans with relatively low interest rates, friendly service and assistance for those whose credit score would make it hard to obtain a loan from another lender. Speak with one of our representatives for a customized solution to your mortgage needs.