Over the last two years one of the most common home loans that many people have turned to in the United States, especially in Southern California, is an FHA loan, but what exactly is an FHA loan and how does it help you if you plan on buying a home?
In this article we will provide you with all of the information you need to know about FHA loans so you will be more knowledgeable about them before you choose an FHA loan to buy a home.
What Is An FHA Loan?
An FHA loan is a mortgage loan that’s insured by the Federal Housing Administration and it protects the lender from losses if the borrower ultimately defaults on their mortgage loan.
FHA loans are ideal in 2016 because they typically require a down payment of 3.5% to get into a home vs. 20% and what’s even better is that you can qualify for an FHA loan with a credit score that’s 600 or as low as 580.
Unlike other traditional lenders the FHA is also flexible with people who have credit scores under 500 especially if they have non-traditional credit history or even credit that can be considered to be insufficient.
FHA Loan Advantages
Some of the other advantages of FHA loans is that the FHA does give sellers the ability to devote up to six percent of the proceeds from the sale of the home to pay the buyers closing costs and this is a huge advantage since closing costs can amount to thousands of dollars that many first time home buyers are unable to pay without assistance.
Last of all, but most important, one thing many people don’t know about FHA loans is that they are assumable and this means that a buyer can assume a sellers FHA loan once they purchase their home.
Learn More about FHA Loans
To learn more about FHA loans contact Fred Sed Realty today by calling us at (800) 921-9231 or connect with us online.