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An FHA insured loan is a
mortgage that is insured by the Department of Housing and Urban
Development or HUD against default. The main benefits of obtaining this
type of mortgage are the income requirements and the credit flexibility.
FHA loans require an up-front-mortgage-insurance-premium of 1.50%, which is
usually financed into the loan, and a monthly premium of .50%. The lender
can remove this monthly premium, once the equity in the property has
reached 22%. There are many advantages in obtaining this HUD insured FHA
home mortgage. Most of the FHA programs are
designed for first time home buyers and low to moderate income borrowers.
FHA loans have lower down payment requirements and are easier to qualify
for than conventional loans.
How the program works You may have heard the term FHA used before, but did
you know that FHA financing is one of the most popular ways to achieve
homeownership today? In fact, it's easier for more people to purchase
their first home with the help of FHA financing than any conventional loan
program in America. As specialists in the field of FHA financing,
Independence Mortgage Services, Inc. encourages you to examine the facts.
Although there are many similarities between FHA and
conventional loan programs, there are some big differences as well. The
major difference is that FHA allows for borrowers with less than perfect
credit to receive a loan approval that otherwise might not qualify under
conventional credit guidelines. And contrary to what you may have heard,
FHA interest rates are just as competitive as conventional loan programs.
In addition to relaxed credit guidelines, FHA down
payment requirements are substantially less than conventional loan
programs. While most banks require at least a 5% down payment on single
family homes, FHA requires as little as 2.25% to 3% down on a 1-4 family
home. FHA also allows the entire down payment to be gifted from a family
member while conventional loan programs do not allow for gifts for the
initial 5% down payment.
The FHA was enacted by the federal government to
stimulate affordable housing nationwide. As a FHA and HUD Approved Lending
Institution, Independence Mortgage Services, Inc. has helped homebuyers
achieve homeownership utilizing the opportunities provided by HUD and FHA.
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