When you are interested in getting a mortgage to buy a house, you will always find that there are many types out there. All of these have advantages and disadvantages that make each suitable to a particular kind of customer. This means that when you are shopping for one, it’s always necessary to arm yourself with all the knowledge you need to make a good decision about which kind of loan to get. The use of loan and mortgage software often comes in very handy, since it helps one figure out the best kind of mortgage to get, depending one’s circumstances including how much risk they can tolerate.
One type of mortgage that you should seriously consider if you want to get the most out of the loan is an FHA mortgage. This refers to a mortgage that is insured by the Federal Housing Administration, which means that in case you are unable to service the mortgage, the government would take up the responsibility for paying back the loan. This fact gives FHA loans a number of distinct advantages over all other kinds of loans.
The most apparent of these is the amount that you are required to pay as down payment when getting the mortgage. For a regular private mortgage, you might be required to pay up to 20% of the home’s value as down payment. With the FHA mortgages, however, this value is much lower at 3.5%. This essentially means that it’s the best kind of mortgage to get when you have financial constraints, since you don’t have to strain too much to get the mortgage in the first place.
The other attractive feature of the FHA mortgage is the fact that the terms for applying for one are very lenient. Most private mortgage companies try to reduce their risk by making sure that they do thorough credit checks for their applicants, and only approve the mortgage for those who have spotless credit. However, this is not the case with the FHA mortgages. The fact that they are insured by the government means that the lenders can take more liberties when approving the mortgages.
This means that even if you have a poor credit history, you still have a chance of getting the mortgage if its FHA backed. This makes it accessible to all kinds of people irrespective of their financial background. These loans are also assumable, which means that if you sell the house, the person buying it can take up the responsibility for the mortgage. You don’t have to keep paying for it once you sell the house.
Clearly, FHA loans have a number of very attractive features that make them ideal for all sorts of people. When you are thinking of getting a loan, it would be a good idea for you to consider this kind of loan, instead of just getting a private one. It’s also wise to use mortgage and loan software to find the best set of terms to suit your financial needs as well.