FHA loans are either to purchase a new home or to refinance an existing mortgage and offers the ability to draw cash out of the equity of your home. These programs are provided at higher loan to values than the standard conforming guidelines and have the ability to review compensating factors that allow for more flexible underwriting standards. At Kiel Mortgage we want to ensure that you understand the benefits and costs of this type of mortgage. We will take the time to understand your situation and find the right program to fit your needs.
A home loan insured by the FHA is usually available at an attractive lower rate and is open to all qualified borrowers. FHA loans are underwritten through the standards established by the Federal Housing Administration and are fully insured by the Department of Housing and Urban Development (HUD).
The main advantage of an FHA home loan is that the credit criteria for a borrower are not as strict as conventional loans sold to Fannie Mae (FNMA) or Freddie Mac (FHLMC). Someone who may have had a few credit problems or no traditional credit may not have a problem obtaining FHA financing.
The monthly mortgage insurance premium is less expensive for an FHA loan versus a conventional loan with 3% down. Many people make the mistake and assume that FHA loans are only available for first-time homebuyers. This is not true. FHA loans are available to anyone, whether it is your first or fifth home. FHA financing is a great option and at Kiel Mortgage we can help you review the benefits and the drawbacks of this type of loan and help you determine if FHA is the right loan for you.