Using An FHA Loan To Buy Your Logan Utah Home
Posted by Lisa Udy on Monday, January 10th, 2011 at 2:10pm.
As
interest rates remain low, now is a good time to buy a home. When the
time arrives to purchase a home, most people will need a loan to cover the
costs. Probably the most popular loan to receive is an FHA loan, which stands
for Federal Housing Administration.
The FHA loan was developed during the Great Depression when millions of citizens were not able to pay their debts. The government set up the FHA to help families be able to afford homes. Basically, the FHA insures the loan so a lender can loan you the money with no risks involved.
Most first time buyers obtain these loans because they are
easier to acquire and have a relatively low down payment. Usually the down
payment on a FHA loan is as low as 3.5% and will never surpass 5%.
The FHA also has a down payment assistance program that help home buyers with the necessary money for a down payment. Another main benefit an FHA loan has over conventional loans is that you do not need to have a perfect credit score.
They just cannot have had a bankruptcy in the last two years and there cannot have been any foreclosures on your property. It is suggested that a buyer have no more than two payments that are 30 days late in the last two years.
Some individuals who
get this loan do not have a credit history at all. They just need to prove that
they can make payments. In addition, FHA loans usually require less income to
qualify than other loans. The debt to income ratios are usually anywhere from 28
to 41%.
One of the things that the FHA requires is an appraisal of the
home to make sure that they property is acceptable. An FHA appraiser looks a
little more carefully than other types of loans. The FHA wants to make sure that
the home is a secure living environment and there are not many big repairs that
need to be made.
They ensure the paint is safe and that it is not a fire hazard.
They look at the smoke detectors, window screens, roof, furnace, and they check
the utilities to ensure that they are in working condition. An FHA loan
appraiser is just more thorough and detailed.
With any loan, there are
closing costs to consider. The seller, lender, and realtor can agree to pay all
or a part of the borrowers closing cost. The credits of all three put together
cannot go over 6% of the purchase price. The down payment cannot be included in
the closing costs. All military, Foreign Service personnel, or anyone in the
intelligence community can still take advantage of the 1st time home buyer
credit in which they can receive up to $8000 of tax credit.
When looking
for a loan, it is important to keep in mind that the FHA limits the amounts of
loans. In parts of the country where homes are extremely expensive, a FHA loan
many not cover the entire cost of the home. The FHA is currently in the process
of asking congress to increase loan limits.
FHA loans are not only for
1st time home buyers. They are an excellent choice for anyone that needs
assistance in financing a home.
About the Author – Tim Ryan is a Naples Real Estate agent. Visit his website to search thousands of Naples homes for sale.
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