With mortgage rates being at record lows, many people are ready to purchase a home or refinance their existing mortgage. If you are one of the many Americans who want to take advantage of one of the best times in many generations to buy or refinance, you are probably weighing the loan options that are available 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.
conventional Vs Fha Loans - Know Your Options
Two of the most coarse loans right now are conventional, fixed-rate mortgages & the government-backed Fha loan. Each loan offers unique features that advantage separate situations. Knowing some of the advantages and drawbacks of both loans will help make your decision easier:
Similarities between accepted & Fha loans
* Both loans currently offer some of the bottom rates in history. 15-year accepted fixed-rate mortgage rates are at an all-time record low. Fha rates are slightly higher but in general, rates are contentious and comparable.
* The most popular Fha & accepted loans are fixed-rate mortgages. That means the interest rates won't convert for the life of your loan.
* However, both accepted & Fha offer Arms (adjustable rate mortgages).
Advantages of an Fha Loan over a accepted Loan
* reputation qualifying criteria not as spoton - reputation scores as low as 580 now qualify for an Fha loan. Additionally, your allowable debt-to-income ratio is higher on an Fha. Meaning, if the estimate of debt you carry is relatively high compared to your earnings you may still qualify for an Fha loan.
* Low down cost required - Fha loans ordinarily wish as little as 3.5% down on the purchase of a home. Government requirements also feature some of the bottom amounts needed to close a loan, potentially leaving more money in your pocket at closing.
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