If you’re like most people buying a home in Nashville, Brentwood, Franklin or any of the surrounding communities, you’ll need to take out a mortgage loan. However, loans can be confusing – there are a number of different types, so it’s important that you become familiar with the type of loan that’s right for you. In some cases, an FHA loan is the right choice.
What is an FHA Loan?
An FHA loan is a traditional mortgage that’s insured by the Federal Housing Administration. In many cases, they help lenders because they are insured by the federal government. FHA approved lenders typically have a lower risk of loss if the buyer stops making payments on the home loan.
Possible Advantages of FHA Loans
Every buyer is different. In order to determine what type of loan is right for you, it’s usually a good idea to meet with lenders directly to discuss the pros and cons of the types of financing you are considering.
Typically, FHA loans require a relatively low down payment. In most cases, this equals about 3.5 percent of the homes total value. In many cases, people with blemished credit, bankruptcies and even foreclosures can be approved for a FHA loans.
In some cases, and FHA loan can be beneficial to people who can’t come up with a 20 percent down payment or have a difficult time getting approved for private mortgage insurance.
Finally, some FHA loans are assumable. If you choose to sell your home before you have completely paid off the mortgage, the new buyer may be eligible to simply take over your mortgage payments.
Possible Disadvantages of FHA Loans
FHA loans require two types of mortgage insurance premiums. The first is an upfront mortgage insurance premium; however, this premium can sometimes be rolled into the loan. The second is a monthly premium, which will vary based on the amount you borrow and the duration of your loan.
Additionally, the home must meet certain criteria and be appraised by an FHA-approved appraiser in order for you, the buyer, to qualify for this type of loan.
Are You Buying a Home in Davidson County or Williamson County?
If you’re looking for a new home in Franklin, Brentwood, Spring Hill or any of the surrounding communities, we can help. Call us at 615-473-5973 or get in touch with us online so we can build a custom search just for you.