With mortgage rates being at article lows, many citizen are ready to buy a home or refinance their existing mortgage. If you are one of the many Americans who want to take benefit of one of the best times in many generations to buy or refinance, you are probably weighing the loan options that are ready to you.
If you are a first-time home buyer or have not thought about your existing mortgage in years, it may be hard to tell which loan type will be the best for your situation.
approved Vs Fha Loans - Know Your Options
Two of the most base loans right now are conventional, fixed-rate mortgages & the government-backed Fha loan. Each loan offers unique features that benefit separate situations. Knowing some of the advantages and drawbacks of both loans will help make your decision easier:
Similarities between conventional & Fha loans
* Both loans currently offer some of the lowest rates in history. 15-year conventional fixed-rate mortgage rates are at an all-time article low. Fha rates are slightly higher but in general, rates are competitive and comparable.
* The most popular Fha & conventional loans are fixed-rate mortgages. That means the interest rates won't convert for the life of your loan.
* However, both conventional & Fha offer Arms (adjustable rate mortgages).
Advantages of an Fha Loan over a conventional Loan
* credit qualifying criteria not as definite - credit scores as low as 580 now qualify for an Fha loan. Additionally, your proper debt-to-income ratio is higher on an Fha. Meaning, if the amount of debt you carry is relatively high compared to your wage you may still qualify for an Fha loan.
* Low down cost required - Fha loans commonly want as small as 3.5% down on the buy of a home. Government requirements also highlight some of the lowest amounts needed to close a loan, potentially leaving more money in your pocket at closing.
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