If you hate the thought of your landlord getting wealthier every month when you hand over that rent check, you have likely dreamed of owning your own home one day. That day, however, never seems to come. Most banks want you to have great credit and a healthy down payment, and these things seem to always be just beyond your grasp. Before you give up all hope, read below about a way for people to get financing that has many people realizing their home ownership dreams with a program offered by the Federal Housing Administration (FHA).
Is your credit score barely fair?
Many people have less than perfect credit and just learn to live with having to pay higher interest rates when they do get lending. There is good news, though, if your score is at least 580. With this score you may qualify for an FHA guaranteed loan with a low down payment of only 3.5%. Even if your score is between 500 and 579, you can still get financing with a down payment of only 10%.
Do you have a bankruptcy on your record?
If you have a discharged chapter 7 in your financial background, take heart. The FHA might guarantee your mortgage loan as long as it has been at least 2 years since your final discharge. Your credit history since the bankruptcy should demonstrate that you have learned from your past mistakes and now know how to use credit more wisely.
Do you have a foreclosure in your past?
This can be a problem for those seeking home financing, and it is understandable that a lender would be very hesitant to loan to those you have not honored a past mortgage. If your most recent foreclosure was at least 3 years ago, you may be considered for an FHA loan. If you can show a good reason for your past foreclosure, you may be able to get approved before the 3 year mark.
Understanding the guarantee
You may have noticed the term "guarantee" with FHA loans, and that can lead to some common misunderstandings. Unfortunately, it does not mean that you are guaranteed to get a loan. The guarantee is not to you, the loan applicant, to but the lender. The FHA promises to pay the lender if you walk away from your mortgage. This means that the lender has a lot less to lose by extending credit to you, so it is very much in your best interest to take advantage of this perk.Share
20 December 2017
I really wanted to buy a golf cart to use to get back and forth from the bus stop and my sister's house. What I didn't realize when I first started looking at golf cars is how expensive they can be. That was when I began looking into financing options. I had to decide whether to use the financing services through the golf cart sales place, or to go around them and find a loan on my own. I took my time to learn the pros and cons of each type of loan that I was considering. Scroll through my site to find the pros and cons of different types of loans.