The process of buying your first home can be daunting and challenging, especially when it comes to finding the right financing options, and one of the most popular for first time home buyers is the FHA loan which is government insured and allows you to put down a 3.5% down payment instead of the usual 20% required for conventional mortgages.
With a continuing increase in the number of FHA home buyers, here is a list of 7 of the best reasons why you should consider this type of loan for your first house.
FHA Loans Are Popular With First Time Home Buyers
Every year for the last several years there have been over one million FHA loans issued per year in the United States.
FHA loans (and FHA refinancing) are so popular because of the common standardized process from application to closing, and because it makes home buying much more affordable for first time home buyers.
Every Important Step Is Taken Care Of
There is a well documented step-by-step process for getting ready and then getting approved for an FHA loan that anybody can follow, from budgeting and credit score review to getting everything ready for the final approval of your loan.
So many families have gotten FHA mortgages over the years that there is a wealth of information and common sense tips that show you the entire process from beginning to end.
All Major Lending Institutions Offer FHA Loans
The Federal Housing Administration was created after the Great Depression by the government because banks and financial institutions stopped lending out money for homes and created a credit freeze because of the fear in the market.
In order to stimulate lending for home loans, they started offering to insure new mortgages. Because of this you will find that basically every major bank or mortgage company will offer an FHA option which can also allow you to shop around and compare rates to see where you can get the best deal.
It Makes It Easier For A New Couple To Buy A House
If you are a newly married couple, the FHA loan option can be the perfect solution for buying your first house at a monthly payment you can both afford comfortably without nearly as big of a downpayment that would be required with a conventional mortgage.
As a real estate agent, I have helped more couples buy a house using an FHA loan than single individuals, since the qualifications allow you to combine the income of both individuals to determine the amount of the loan or the monthly payments.
The Standardized Process Includes Appraisal And Inspections
Two of the important steps in the process of buying a house and especially when it comes to getting approved for financing are getting a professional appraisal and getting a home inspection.
Even though you might need to pay for these out of pocket, it makes the home buying process safer you both you as the buyer and for your lending institution to guarantee the security of the loan.
Government Insured Loans Were Created To Bolster Lending
This is one of the reasons why nearly every single bank and lending company will give you the option for an FHA loan, since the government started insuring mortgages and loans after the Great Depression to encourage more lending activity and home buying.
Since there is nearly a 90 year precedent for government insured mortgages in the United States, it has now become an industry standard and a popular option for individuals and couples buying their first home.
FHA Loans Are Not Difficult To Refinance In The Future
Because of the rigid standardization of issuing an FHA loan, it turns out to be one of the easiest types of mortgages to refinance (not to say that the mortgage refinancing process is considered easy).
There are hundreds of thousands of FHA refinancing loans every year because many homeowners decide to refinance a conventional mortgage with an FHA loan, or because they are moving from one house which they purchased with an FHA loan to another home.
Final Thoughts On FHA Loans
When deciding if buying a house with an FHA loan is the right option for you, it is important to get your head wrapped around the numbers such as your credit score, your personal expenses and the debt-to-income ratio which will determine how much you can afford to pay per month.
By taking the time to really sort out your personal finances you can make it a realistic goal for you to buy your first house using this very popular financing option.