The Federal Housing Administration (FHA) offers some truly life-changing benefits for first-time homebuyers. Applying FHA terms through the right lender gives you extraordinary amounts of leverage when breaking into the homebuyer’s market, especially if you don’t have huge cash reserves or top-flight credit.
Before we get into what Lee’s Summit FHA Loans can do for you, let’s learn about what the FHA gives to all eligible homebuyers.
The Benefits of an FHA Loan
The FHA reduces the amount of money you need as a down payment. Traditional loans usually require 20% in order to avoid an extra insurance payment known as private mortgage insurance (PMI). PMI offers you no extra benefit, yet it can add up to 1% per year to the price of your home. An example: If you have a $250,000 mortgage with PMI, you may pay an extra $2,500 per year.
With the FHA helping you, your down payment minimum is 3.5% instead of 20%. You can also use gift funds to pay this 3.5%.
An FHA loan may reduce your closing costs to zero. On a $250,000 mortgage without FHA backing, closing costs could run you anywhere from $5,000 to $6,000.
FHA terms are also advantages for cash outs and refinancing. The FHA cash out option allows homebuyer access to 85% of the loan value, and you can refinance up to 97% of the loan value.
Although these may sound like great terms, they are not automatically applied to every new buyer. You need an FHA lender who understands how to maximize your financial position to bring you these benefits. With limited cash on hand and less-than-perfect credit, you will need help in accessing the true leverage of the FHA.
Requirements for an FHA Loan
Unlike some other forms of government homebuying assistance, you do not need to meet low insurance thresholds in order to take advantage of an FHA loan package. It is a real advantage that rewards hard work, but you must leverage your position in the right way. A professional lender with experience in the process will guide you efficiently into your best solution.
You may be on the other side of the homebuying spectrum, with a need to finance your entire mortgage. The FHA has provisions for this, and the right financial partner can streamline your access to it.
Partnering Lee’s Summit FHA Loans
Lee’s Summit FHA Loans is the financial partner you need. Give us a call or an email when you are ready to seriously discuss your options with an FHA loan. Buying a home for the first time can seem overwhelming. We are here to help.