Owning a house doesn’t come easy for most of us. It usually takes a lot of time, planning and saving up to finally have one. It is also rare for you to see someone purchasing a house in cash. Most buy using mortgage since it is the most convenient and most comfortable way to own one. If you are reading this, then you may be planning to buy your own house at this time. Congratulations! It is a huge leap for you.
If you are ready to own your first house and you want to take it out on mortgage, you need to be wise and choose the best one for you. There are many types of mortgage loans to choose from. While one may be suitable for an individual, it may not be the perfect one for another borrower. It all depends on your situation and your finances.
The best way to decide on which one to take is to learn as much as you can about them. We have conventional loans and government-insured loans. While all of them has its advantages and disadvantages, we will focus on a particular type of government-insured loan today, the FHA loan. Let’s get to know more about FHA Loans Arlington.
FHA Loan Defined
The US Federal Housing Authority (FHA) is the one who implements the FHA loan. It is a common type of loan, especially for first-time borrowers. The main goal of this program is to help American families own houses without giving them a lot of financial struggles. Thus, one of the primary features of the loan is a lower down payment. One thing you need to take note about this loan though is that the borrower is required to pay for mortgage insurance premiums. It is to guarantee the lender in the case that the borrower’s credit will default at any time in the future.
Also read: FHA vs. Conventional Loans in Plain English
It may be one of the best types of a mortgage loan, but it is not easy to get approved for it. It entails different qualifications and requirements. The primary criterion for it is for the borrower to have a valid Social Security Number. It means you need to be a U.S. citizen in his legal age. You also need to have stable and sustainable employment. You need to be with your employer for at least two years and with a good record too. Your back-end ratio should also be a maximum of 43 percent of your gross income. If you go higher than that, then you might not be approved. However, there are exceptional cases where 50 percent is the maximum for the back-end ratio.
As mentioned earlier, the FHA loan is one of the best kinds of investment. It comes with many advantages. One of the most popular benefits is the low down payment at 3.5 percent of the total cost of the house. They also offer low-interest rates as well as small and flexible repayment terms. Thus, if you want a very convenient way to own a home on a mortgage, try to get an approval for an FHA mortgage loan.