FHA mortgage loans are directed toward those in the market for their first home. However, some stray from obtaining an FHA loan based on assumptions that it just isn't the right loan for them. The reason for this is because FHA loans are often misunderstood. In order to better understand these loans, you will want to know these four little known facts about them, which may just make you reconsider your options:
- FHA Loans Provide Multiple Mortgage Options: When it comes to utilizing an FHA loan, many believe that you must choose the option to have a 30 year fixed mortgage. However, this is not the case since FHA loans also approve 15 year fixed mortgages. You can also adjust in other areas, as well. For example, you could choose an energy efficient mortgage loan to help cover energy efficient upgrades, a new construction loan, and more.
- FHA Loans Aren't Just for First Time Buyers: When it comes to FHA loans, those who have purchased a home in the past automatically think that they could not get approved for one. However, this is not always the case since those who have had financial hardships when they first bought a house can also be approved. So if you had to file bankruptcy or you foreclosed on a home in the past, you can probably get approved for an FHA loan as a second chance buyer.
- FHA Loans are Self-Sustaining: Some believe that FHA loans are paid for by the taxpayers of the county. However, this is not the case since FHA loans are completely self-sustaining. It basically runs off the mortgage insurance that is paid for by the homeowners in the program. This means that FHA loans actually help to significantly boost the economy. So if you were against them before because you believed that you would be relying on the taxpayers to buy a home, you can reconsider.
- FHA Loans are Assumable: If you were approved for an FHA loan, you may consider the purchase of a home that is already under an FHA loan. This is because FHA loans are assumable, meaning that you are going to be able to resume the current homeowner's loan and probably have a lower interest rate than you would if you had purchased a home without an existing FHA loan attached. Interest rates are always rising, which is why this may be a great option.
Knowing some of these little known facts about FHA loans surprises many people and can definitely help you to rethink applying for one.