One of the most exciting times in anyone’s life is buying a home. Many people have no idea of all of the red tape that you have to go through when buying a home until they are in the process. The first thing that you have to worry about when buying a home is the type of loan that you will apply for. Checking things like the home equity loan rates or even the current interest rates is a must when trying to get any type of home based loan. One of the most common types of loans for a first time home buyer to get is an FHA variety. Here are a few facts that you need to know before applying for FHA loans.
Credit Standards are More Lax
One of the first things that you need to know about an FHA loan is that the credit score that you have to have is drastically different than a traditional loans. The difference in the credit standards is due to the fact that the FHA loan is guaranteed by the federal government. This means that the lender will be covered should the person getting the loan is unable to pay. The same is true of HARP Loans taken out on Somerville homes that are underwater.
Money Down is required
Another thing that you need to be aware of when getting an FHA loan is that you will be required to put down some money. In most cases around 3.5 percent is the going rate of down payment, which is not that bad considering. You need to make sure that you factor in this down payment when trying to plan for your home purchase. The better you are able to plan out this expense, the easier the homey buying process will be for you and your family. Make sure you find out the particulars of the loan you are seeking out so you can adequately arrange your finances to meet the obligation.
Closing Costs Can Be Covered
Yet another very important thing that you need to know when getting an FHA loan is that the closing costs on the home may be covered. You need to talk with the loan professional that is helping you out in order to get the information on the closing costs. In some cases, the owner of the home will cover the closing costs in order to entice buyers. You need to make sure that you are covering all bases before committing to anything.
Employing the right lender is a vital part of getting the money you need for your home.