Pros of Using FHA vs Conventional Loans

When purchasing one of the new homes in Edmond OK, new home buyers often feel most concerned about the mortgage process. After all, there are so many types of loans and there’s a whole new language to learn when it comes to loans and mortgages. If you’re currently considering the purchase of a new home for the first time, consider a Federal Housing Administration (FHA) loan. You’ll find that there are a number of benefits to this type of loan.

FHA loans are insured by the Federal Housing Administration and typically have lower underwriting standards, and lower mortgage rates than most standard loans. These loans can also be assumed by the subsequent buyer, which makes the FHA loan attractive as mortgage rates rise.

The flexibility of FHA loans is one of the reasons why they are so appealing, particularly for first-time buyers. Although potential buyers should try to have solid savings for a downpayment on a home, the 10-20% often suggested for a downpayment puts the purchase out of reach for many people for years to come. With an FHA loan, it is possible to put down a downpayment of 5% or more. Furthermore, over time, you can always choose to refinance to a different type of loan.

New home buyers often receive financial gifts from family members to help make the downpayment on their first home purchase. Unfortunately, standard loans don’t allow all or most of your downpayment to be a gift. However, with FHA loans, 100% of the downpayment can be a gift from family, an employer, a charitable group, or government homebuyer program.

FHA loans can come from a variety of lenders and there’s a large pool of lenders available, including credit unions, savings and loan institutions, and regular mortgage lenders. Because the market for these types of loans is so large, it pays to shop around to find the lowest rates. In addition, because the underwriting rules can vary from bank to bank, it is worthwhile trying another bank if the first one doesn’t approve your loan. As long as you meet the basic requirements for an FHA loan, you can keep applying at any appropriate institution.

No matter what type of property you want to purchase, including one of the new homes in Edmond OK, there are FHA loans available. While 30-year fixed-rate mortgages are the most common, 15-year fixed-rate loans are also available, as are various adjustable rate mortgages. Furthermore, because these loans can be assumed by the subsequent purchaser, a low mortgage rate can be particularly attractive if mortgage rates have gone up as they are already starting to do.

Of course, should you prefer to refinance in the future, the FHA Streamline Refinance offers homeowners a quick and easy process with no income verifications, home inspections, or credit score checks.

So, if you’re ready to enter the housing market and purchase your first new home, consider the many benefits of an FHA loan.

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