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There are several reasons for asking your lender about the FHA mortgage instead of the conventional mortgage or any expensive and risky sub-prime mortgage. The lower cost of the FHA loans and the competitive rate of interest is the major benefit of an FHA loan. The Federal Government insures these loans. One should always compare the FHA loans with the other types of loans. The smaller down payment on FHA loans is another benefit. It allows a down payment of 3 per cent and that amount can come from any family member, charitable organization as well as employer. Several loans do not allow this option.
The FHA loans are much easier to qualify as compared to other loans. As the FHA insures the loan, lenders are now more willing to give the loans even to those who have lower qualifying requirements; therefore, it is easier for anyone to qualify.
It is easy for individuals who have credit problems and do not have a perfect credit report because of bankruptcy, to qualify for the FHA loans than any other conventional loan, as the FHA insures the mortgage. The FHA has been working since 1934, and the people can expect continued protection. If anyone encounters hard times after purchasing the home, FHA has several options to keep the owner in his home as well as to avoid foreclosure.
The procedure for applying the FHA loan is very simple. The loan officer would help you in completing the loan application as well as the applicant needs to sign various forms that authorize the lender to check and verify his employment, savings and income. With the help of that information, the lender would order your FHA case number, which is a kind of identification number of the loan application.
The lenders would also order for appraisal in order to find the property’s value as well as its condition. The appraisal of FHA is similar to the appraisal of other loans. The lender also reviews the appraisals, for determining the property value and the condition of the property as well. Thereafter, the lender makes any decision on the application.
The last step is signing the closing papers. The borrower is then ready to go to closing or settlement. One should read all the details carefully before signing. Apart from signing several documents, one requires extra money for the closing costs.