If you’re reading this now, it’s probably because you’re thinking about applying for a mortgage in Florida or Georgia. (And if you are, take a moment right now to give us a call at Avrus Financial and Mortgage, and we will be happy to help you with this and the myriad other issues that involved the navigation through the mortgage process.)
One option that you may wish to consider is a FHA loan.
FHA stands for the U.S. Federal Housing Administration. The agency was established in 1934 and belongs to the federal department of Housing and Urban Development. The FHA’s goal is to provide mortgages to individuals and families at interest rates below those of conventional loans.
The Federal Housing Administration was the first lender to make sure that construction and appraisal standards are done for property inspection prior to the loan being approved, and the FHA guidelines continue to influence the housing industry today.
FHA loans are good for both mortgage borrowers and mortgage lenders. They are always in demand because of the low down-payments and low interest rates. In addition there is lifetime insurance against borrower default.
It’s still important to shop for your mortgage: while the federal government sets the standard for FHA loans, local lenders have some latitude and can respond to local conditions, so it’s still in your best interests to get more than one quote.
The primary FHA loan that you’ll be looking at is called a Section 203(b) loan. Section 203(b) allows you to purchase either a house or a condominium (as long as you live in it, because the purpose of these loans is to give you a home, not provide you with rental income or a vacation place to stay).
You are also restricted to only one FHA loan at a time.
The low down-payment isn’t the only FHA loan component that you’ll find helpful. With the Section 203(b), your entire down-payment can be a gift (in case your parents or some other relative wants to help you get started). Conventional mortgage loans don’t give you that option: you have to save up for your down-payment with conventional loans. In addition, there is no prepayment penalty for a FHA mortgage.
