Why going FHA is the best way? by Bo Kociuba, Realtor, www.Okla-OK.com

Is going FHA really the best way?

For the last few good years FHA (Federal Housing Administration) loans were not so very popular. But this is definitely changing and the attractiveness of the loan once more is appealing to the borrower.

This financing option was born during the Great Depression out of necessity to assist the nation which was facing the greatest financial crisis. With years passing, however, this type of a loan fell out of favor because of housing prices going up and limitations on amount of money which could be borrowed.

Fast forward to today's date and our nation faced again with a big financial challenges. And once more we notice a very strong consumer interest in this type of a loan.

What is an FHA loan? The FHA doesn't lend the money or set the interest rates but it insures loans for lenders against defaults. To obtain a competitive interest rate and terms on a mortgage, you should compare options offered by different lending companies.

Why consider an FHA loan? It is a very appealing form of financing for majority of us and here is why:

• if you are a first time home buyer
• if you don't have a lot of down payment money
• if you want to keep monthly house payments low
• if you are a buyer with less than perfect credit
• if you want competitive interest rate

Because of the insurance the FHA offers the lenders can offer more attractive interest rates and less strict requirements (debt to loan ratio) to qualify which greatly benefit the borrower. 3.5% required down payment could be obtained from a family member, employer or charitable organization as a gift. There also other options for down payment like the community action programs. The best way to find out which options are available to you is to seek advice from your lender.

What kind of loans FHA offers?

• Fixed rate - the advantage of this loan is that the interest rate stays the same during the loan period, and your payment doesn't change
• Adjustable rate - if you are buying more expensive house you may 'lower the payment' because the initial interest rate and payments are low. However, the terms will change during the life of the loan.
• Purchase/Rehabilitation - if you are interested in a house which require lots of work you may apply for Single Family Rehabilitation Loan program also known as 203K

Most loans require some sort of insurance when down payment is less than 20% of the sales price. And yes, you have to buy mortgage insurance in order to obtain the FHA financing. The premium is charged up front or in monthly installments and is equal to the percentage of the mortgage usually 1.75 percent.

In summary FHA insured loans offer a lot of value and benefits to potential borrower.

Happy HOME HUNTING!

With smiles, Bo

PS.

When you have my team on your side you'll be amazed at the results of the home buying and selling process - so let's get together!