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Use The FHA And Start The Process Toward Buying Your Very Own Home – Today!
By: John R. Blakefield
The FHA or Federal Housing Administration is now a part of HUD or House and
Urban Development, which are responsible for making home ownership more
accessible for more Americans. What is great about the FHA, is that you do not
have to have perfect credit or a high paying job. The payments are usually
smaller than bank made loans, as well as the down payment needed towards a home
is also much smaller than what would normally be accepted.
Qualifying for a FHA loan is surprisingly very easy! You must be able to meet
the minimal credit requirements, plan to use the home as a primary residence,
and of course can afford to make the monthly mortgage payments, which are often
comparable to rent payments. You must be able to show a steady income for three
years and have paid your bills on time. There is no limit on the amount of
income that is needed to qualify. Instead of making a land lord richer, the
average person can put money towards an asset, a home.
The limits set on FHA loans change periodically and vary according to home
markets throughout the country. However, they often vary anywhere from $100,000
to $210,000. A lender should be able to tell you exactly what the limits are in
the area you're looking to purchase.
It is also simple to get a FHA loan, especially with the use of the Internet.
The process is similar to any other loan, with the addition of a few extra forms
to fill out, which your lender will happily provide. You no longer have to meet
person to person, but can apply for a loan on-line, by phone or mail. It is now
easier and faster to get your FHA loan.
There are many sources that qualify as income for the FHA loan which include
unemployment compensation, retirement pension payments, child support, seasonal
pay, alimony, Social Security income, savings plans, military pay, part-time
pay, bonus pay, and overtime also count. Consistency is more important than
income amount when it comes to qualifying for a FHA loan.
The debt-to-income ratio is more forgiving with a FHA loan. For example, while a
normal loan would have a ratio of only 28% of your income toward housing and 36%
towards housing and long term debt, the FHA loan accepts 29% of your income
toward housing and 41% toward housing expenses and long term debt.
There are ways to increase this ratio by demonstrating that you can put more
toward housing expenses, can decrease monthly housing expenses, increase your
down payment, have substantial cash in savings, have a net worth that can pay
the mortgage regardless of income, or have a better than average credit history
or limited credit use.
The down payment with a FHA loan must be at least 3% of the purchase price of
the home. So if your home costs $200,000, you would need to put down at least
$6,000. Private lenders would require 3%-5% with many more qualifying factors.
This down payment can be paid with cash gifts or money from a savings club.
You can assume a FHA loan, cutting closing costs and other costs associated with
creating a new loan. You often will have a lower interest rate and do not have
to go through so many qualifying steps. If you have enough money to support the
mortgage, and have some credit, you can generally assume a FHA loan very easily.
If you do not have a large income, but are diligent in paying your bills and
have at least some credit, even if it is below average, or even no credit, check
out a FHA loan for your specific area and take steps to owning your very own
home, and stop paying rent in a crammed apartment community or home that you
can't do what you please to it. There are organizations that offer opportunity
to all people in all situations and the FHA is one of them. Use it to your full
advantage and own your own home, when you thought that could never be a part of
your life!
About the Author:
John R Blakefield is a mortgage and real estate specialist. For more
information, articles, news, tools and valuable resources on home mortgages or
investment loans, refinancing, debt solutions, visit this site: http://www.scourtheweb.com/mortgage |