| For a first-time home buyer, the process of buying his | | | | borrower will have to escrow his or her property |
| or her first home can be complicated and expensive, | | | | taxes and homeowner's insurance into an account to |
| but it doesn't have to be! FHA loans have flexible | | | | keep payments up to date. |
| requirements and actually save first-time home buyers | | | | The FHA does not have strict credit and income |
| large sums of money both upfront and in the long run. | | | | requirements. The borrower needs to have gone at |
| These loans offer multiple benefits and are not difficult | | | | least twelve months without any delinquent rent |
| to qualify for! | | | | payments and should have a credit score of at least |
| Benefits of this Type of Financing | | | | 620. In some cases, a borrower with a credit score |
| While many home loans can require large down | | | | lower than 620 can still qualify for a loan, but may |
| payments, this type of loan has a low down payment | | | | have to make a higher down payment. Borrowers |
| requirement. The down payment is usually about 3.5% | | | | must also be financing a home that is considered to be |
| of the purchase price. Applicants who are just starting | | | | their primary residence, which means they will live |
| out may not have a large sum of money to pay up | | | | there at least six months out of the year. |
| front, so this loan would be very beneficial to them. | | | | Now is the Time to Take Action! |
| New homeowners can use the money they save to | | | | Current FHA guidelines are scheduled to change this |
| pay for the many other expenses associated with | | | | spring. First, the down payment requirement will be |
| buying a new home. | | | | higher for borrowers with credit scores lower than |
| These loans are insured by the Federal Housing | | | | 580. Secondly, the required mortgage insurance |
| Administration (FHA), which makes lenders more likely | | | | premium will increase to 2.25%, which will increase |
| to offer low interest rates. Interest rates fluctuate daily, | | | | home buyers' upfront costs. Third, the amount of seller |
| but these loans often have lower interest rates when | | | | concessions permitted will soon be capped at 3%. |
| compared to other types of home loans. With a lower | | | | These changes are meant to improve the viability of |
| interest rate, homeowners save money on their | | | | the FHA loan program. |
| monthly mortgage payments and over time. This | | | | First-time home buyers who apply for a loan and have |
| leaves more money in their pockets every month for | | | | a purchase contract by April 30, 2010 can also take |
| all of their other expenses. | | | | advantage of the first-time homebuyer tax credit, |
| Loan Requirements | | | | which can provide up to $8000 in tax credits. This is |
| This type of financing does have certain requirements | | | | yet another way for them to save money with their |
| for borrowers. An appraisal will be done to determine | | | | FHA loans. This incentive ends soon, so borrowers |
| the home's value and to ensure that the home is | | | | who want to use the tax credit should act now! |
| hazard-free and structurally sound. At closing, the | | | | First-time home buyers who want to enjoy the |
| borrower must pay an upfront mortgage insurance | | | | benefits of an FHA loan, and save money by avoiding |
| premium to cover the costs of the loan in case of | | | | the upcoming changes, should contact an FHA loan |
| default. This mortgage insurance premium is usually | | | | specialist for more information about how to apply. |
| equal to about 1.75% of the total loan amount. Also, the | | | | |