Need to buy a home, but can’t afford a generic loan? There are options out there for you that won’t break the bank. Consider an FHA insured loan, made specifically for people with difficulties in their financial states. Learn a little more about FHA loans, and why you shouldn’t give up on buying a home just yet!
What is FHA?
The FHA, or Federal Housing Administration, was created by the National Housing Act of 1934. It’s been around for over 70 years, and has operated various lending programs to help insure other lenders around the country. It was originally created to give creditors and lenders more of a reason to finance the poorer people in the nation, allowing them to buy houses, even if they were unable to afford a standard loan. It’s only grown since then, providing a stronger support for various lenders around the country.
What does the FHA do? It provides insurance on loans. This helps creditors become more willing to provide home loans to someone with a smaller down payment, or worse credit. The insurance means that the lenders will get their money back, and that despite the risk they’re taking, they’ll still get the repayment one way or another.
What Does it Change?
When considering a standard loan and an FHA loan, there are some obvious changes. The insurance it provides allows creditors to offer a lower down payment, as well as a lower insurance rate and monthly payments. There are various ways you can get ahold of this type of loan, but it has to be through an approved lender. Once you find the lender, they’ll check over the financial situation, and assess the risk that the borrower may pose. Once the risk is assessed, the FHA loan begins the process, and there will be various steps to go through until then.
First off, there is something called a down payment grant, or down payment assistance. It’s an aspect of the FHA loan that is considered at the time. This could lower your down payment from 20% down to as low as 3.5%. Some cases even experience a down payment free loan. Most grants to lower down payments are through outside companies, such as the Grant America Program, though you’ll receive automatic down payment assistance in an FHA loan.
When you’re buying a home, you might think that you’re just going to pay what the sticker on the front door says. However, there are other things to look into, such as the closing costs. These can cost a couple of extra thousand dollars, and can put a financial strain on someone who hadn’t been expecting them. With an FHA loan, you could have your closing costs reduced, so that you’ll again be spending less out of pocket. You won’t have to empty your savings account to buy the home, and that has always been the goal of the FHA.
Another major plus for those trying to get an FHA loan is the lowered interest rate. Interest is calculated according to your credit history, among other things, and it can really ruin your chances of buying a decent house. An FHA loan assures a lowered interest rate, something more manageable to anyone in need. It’s one of the reasons many people ask for an FHA loan.
How Do You Qualify?
The general consensus is that you must have a credit score of at least 580, been with your employer for the past two years at least, and be asking for a mortgage rate that would not exceed 31% of your monthly pay. In other words, you have to prove that you’re at least somewhat dependable, and will do your best to follow through on the loan. This loan is to help those who might not qualify for a standard loan, but it doesn’t cover everyone.
How Can You Get One?
Your first step in getting an FHA loan is to find an FHA-approved lender. Don’t worry, though! Kloze is an FHA-approved lender, and does indeed help people buy homes with an FHA loan. We consider your financial situation, and calculate the amount that you’d be able to safely pay back on time to ensure that you can afford the house you want.
We cut down your down payments and closing costs, allowing you to pay off most of the home through your monthly payments, rather than in one lump sum at the beginning. All you have to do is contact NHL Lending today to see if you can qualify!
Kloze provide the best home loan rates in the area, and we tailor the loan to your needs. We carefully consider all of your needs, and build a custom loan to match it. Need a lower interest rate? Worried about affording the down payment? We’ve got a way to help you out, without sneaking things behind your back. We don’t believe in hiding things from you or surprising you with hidden fees once it’s too late to go back. We’ll sit down with you, one on one, and carefully explain things until you know as much as we do about your loan.
We don’t expect you to sign papers blindly, and we wouldn’t accept it anyway. We want you to know about your loan, and how to take care of both it and your mortgage, so that you can have a happy life in your new home. Kloze is one of the best lending companies that you could choose, especially for an FHA loan. So call or email us today, and see just how much your life could change!