For many first-timers, they think that all mortgage loans are the same. However, if you look into it, there are many different types of mortgage loans to choose from. There are mortgage loans that are better than the other, depending on your situation. Therefore, if you are planning on taking out a mortgage loan to purchase your first house, you need to learn everything you can about them so you will make the best decision in choosing which one is the perfect type for you.
As a standard, there are two consequential types of mortgage loans, we have conventional loans, and we have the government-insured loans. The traditional model of credit is probably the most popular among them since it is easy to get approval. However, the benefits are not as good as the latter. With this loan, the standard down payment is twenty percent of the property cost. The interest rate may also be higher than government ones, and the terms of payment are stringent.
On the other hand, government-insured loans are often preferred since they come with a lot of benefits. The required down payment for this is usually a lot lower than the conventional loan. They also offer better interest rates and repayment terms. FHA Loans Corpus Christi is one type of government loan and is among the most popular one. You may also ask a property lawyer what the best choice for you is.
What is an FHA Loan?
An FHA loan is a mortgage loan offered by the Federal Housing Authority (FHA) which is a government department. They aim to provide assistance to American who wants to own a house but do not have financial means to do so. The down payment requirement or this type of loan can go as low as 3.5 percent. Also, the interest rate and repayment terms are flexible. However, just like any other type, it also has its disadvantages. The most popular one is that fact that the borrower needs to pay for mortgage insurance premiums. It is to ensure the protection of the lender in case the borrowers’ loan defaults. If ever you encountered a problem in the future, a property lawyer will assist you.
How Do You Qualify for an FHA Loan?
One thing you need to know about an FHA loan before applying for one is that it has many requirements. It is often thicker than other types of loans. One of the initial conditions is that you need to have a valid Social Security Number, which means, only U.S. citizens that are of legal age are allowed. When it comes to stability, they require you to show proof of employment. You are required to have a steady and stable income with a company for the last two years. You also have to make sure that you have an excellent employment record.
Also read: How Do Mortgage Lenders Verify Employment?
What are the Advantages of an FHA Loan?
When it comes to advantages, we can say that an FHA loan comes with many different benefits. As mentioned above, the required down payment is a lot lower than the other. Furthermore, even the credit score needed is smaller than most lenders. Since it has little interest rates and good payment terms, it is difficult to qualify for it since they still have to check whether you can repay them diligently.