First time homebuyers should do their due diligence with programs that promise them great rates for their first home. But one program that they don't have to worry about scamming them is FHA loans. Getting an FHA Loan Mortgage Rate is simple for first time homebuyers. It allows them to get into a home without worrying about credit problems.
Despite recent rises in interest rates, FHA loan mortgage rates are still low. The sub prime mortgage financing deals may be gone, but FHA loans allow people to break into the housing market. There are some common misconceptions about FHA loans that prevent a lot of people from trying to own a home. It's a pleasant surprise to many that they can still buy a home in today's market.
FHA loans don't take any longer to get approved than any other type of loan. There are just a few more documents to fill out than a standard loan, but your loan officer can help you with those. The extra documents are just there to protect you and your assets during the financing process. The extra paperwork really isn't a hassle when you compare it to the opportunity that you're receiving.
There's also a misconception that FHA loan mortgage rates are higher than conventional loans. Be assured that FHA rates are based on the exact same market factors as conventional rates. Depending on your specific circumstances, FHA loans may even be less expensive than a conventional loan for a first time homebuyer. If you've had credit problems in the past, then you are definitely getting a better rate with an FHA loan than you would otherwise.
The thing that confuses a lot of first time borrowers is the FHA required mortgage insurance. If your mortgage covers above 80% of the property that you are financing, then you'll need mortgage insurance. This insurance will pay off a portion of your loan if you default on it. FHA's mortgage insurance program requires that you put down a 1.5% upfront mortgage insurance payment, which will automatically be added to your loan. You'll also be paying .50% per year, which is also divided up and added to your loan amount. When you compare this to conventional loans that have up to 3% per year in mortgage insurance expenses, the FHA loans are definitely the better deal.
FHA loan mortgage rates are worth looking into if you are a first time homebuyer. There are some restrictions on income, but they are a lot higher than people think. FHA loans are a great option if you meet their qualifications.
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