FHA loans are becoming one of the most popular mortgage loans that homebuyers in Arizona are using in order to finance a new home. This is because there are many palpable benefits to financing with an FHA loan in comparison to financing with the average mortgage loan. With an FHA loan, you can still choose which type of loan you want to finance with, such as a fixed-rate mortgage loan or adjustable-rate mortgage loan, among others. The most significant difference is that an FHA loan, unlike a normal mortgage loan, is backed by the FHA against default.
In comparison with normal mortgage loans, FHA loans usually have fairly low loan-closing costs. This can be especially beneficial for those who live on a tight budget in addition to the expense of a new home. In addition to lower loan-closing fees, FHA loans typically allow for a lower interest rate during the loan period as well, whether you have a fixed-rate mortgage, adjustable-rate mortgage, or virtually any other type of loan. So you won’t only pay less upfront—you’re likely to also pay less overall.
You don’t have to be a first-time homebuyer in order to qualify for an FHA loan. Virtually anyone with the right qualifications can apply for this type of loan. Some people find that they are unsure whether or not they can receive any type of mortgage loan due to a poor credit score. FHA loans, however, are renowned for offering approval to many who have less-than-perfect credit. One of the most important factors in qualifying for an FHA loan is your debt to income (DTI) percentage. FHA loans offer one of the highest DTI percentages in the nation at an astounding 55%. This means that as a homebuyer, you can use 55% of your income to qualify for your loan. With a higher percentage of your income in your favor, you will be able to apply for more financing to buy an even better home.
As well as overall lower interest rates, lower loan-closing costs, and a higher DTI percentage, FHA loans are also known for requiring little to no money down on the mortgage. Lenders can do this because they are confident in the FHA’s guarantee against default. Because of this insurance, lenders are typically willing to offer better deals on virtually every aspect of an FHA mortgage loan.
One additional perk that most don’t know about is the FHA’s willingness to help extend the amount of a loan in order to provide home remodeling. For example, your idea of a dream home may be a fixer-upper that you can remodel, refurbish, and revive all on your own. If you don’t have the money to make these remodels when you purchase your house, however, those additional expenses can actually be included in the mortgage. So let’s say theoretically that you want to buy a fixer-upper for $100,000, and you and your lender work together to estimate the repairs needed to be worth $50,000. You can then take out an FHA loan for $150,000 under certain restrictions pertaining to the home remodeling. In this way and more, Arizona mortgage consultants are making it easier than ever for you to get an FHA mortgage loan
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