Becoming a homeowner not an impossible task
Between the economy and the real estate market, becoming a homeowner may sound like an impossible task. However, loan options exist to help you work around your financial hurdles. If money is tight, an FHA loan may be the key to unlocking a new front door. FHA loans are available to people with lower income levels or tight credit because the Federal Housing Administration promises to pay lenders back if you default on your loan. That way, lenders know they’re covered, and they can prepare more mortgages.
Anyone can apply for an FHA loan since they do not have a maximum income level restriction. So how do you know if an FHA loan is right for you?
- You’re looking for a smaller home: FHA loans are generally small and are based off of each area’s typical home prices. Certain counties also have loan limits, so if you’re looking to purchase a larger or pricier home, you may not be able to do so.
- You have a tight financial situation: FHA loans cater to those with lower income levels, higher debt ratios, and little credit (or even none at all). Even if you have had a foreclosure or experienced bankruptcy, you can still qualify after 2 and 3 years, respectively.
- You need some pocket change: FHA loans have minimum down payments of 3.5%, which is lower than that of conventional loans. You can finance up to 96.5% of your purchase price while still enjoying this small down payment, allowing you to purchase sooner.
North Dakota FHA loans help you save money in other ways as well. Closing costs are regulated by the Department of Housing and Urban Development, keeping them low, and mortgage insurance premiums (MIP) are 1.5% - low as well. FHA loans’ interests rates are generally the same as those of conventional loans, and you will have 12 monthly payments of .5% of your loan amount.
If you are living in a rural area, a USDA home loan may be a good fit for you as well. USDA loans are also meant to benefit low-income individuals and households, but unlike FHA loans, they do have income level limits. Some of the other USDA loan benefits include:
- No down payments
- Loans can finance 100% of the cost
- 30-year, fixed-rate mortgages
- No mortgage insurance required
If you want to purchase a home of your own, the government has created loan programs to help you do so. Don’t let this housing market bring you down.
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