The FHA Loan Option for Montclair Area Home Buyers

Choosing which type of loan can have repercussions on your financial picture for years to come.  Depending on your financial goals and current ability you’ll want to look at how each loan type benefits you now and in the future.

While refinancing later for better terms or payments is always an option should your circumstances change after the purchase of your home that option has built in costs to be considered as well.

The Federal Housing Authority or FHA loan can be a good option when a lower down payment is a top priority.

Usually requiring no more than 3-3.5% down, this Federal backed mortgage makes it particularly easier for first-time and lower income buyers to qualify for a purchase because the financial requirements are not as demanding. They also offer more leniency for buyers who have previously experienced bankruptcy, foreclosure or a short sale.

Expectations that will affect your approval will include:

• A minimum credit score to qualify
• A steady employment history

and the property needs to meet certain guidelines:

• Appraisal must be done by an FHA-approved appraiser
• Property must be in compliance with minimum property standards as defined by the U.S. Department of Housing and Urban Development

Although many conventional loans now offer lower down payment options as well, an FHA insured mortgage doesn’t require the additional cost of PMI payments.  Personal mortgage insurance can add many dollars to the monthly mortgage amount, lowering your overall buying power and how much house you can afford.

It isn’t necessarily that any one type of loan is better than another, but that each loan type offers specific options.  Those options will work best for certain situations for some buyers and other options will work best for other buyers.

Uncertain where to start or what questions you need to ask?  The right mortgage for the right home is a team effort where both your lender and your local marketing specialist will work in harmony to help you find and finance your new home.