You might have worked with mortgage companies in Oakland Township, Michigan before that offered FHA loans. But were you really happy with the service you received? Did any of those companies seem to care about you as a person, or did it seem like they were more interested in making a commission off of you? At Gem Home Loans, we’ve seen examples of this time after time.
We really don’t like that approach – that’s why we’re different. If we truly believe a certain type of loan is right for you – whether it’s an FHA loan or something else – we’ll tell you. If we don’t, we’ll tell you that as well, and work to find another option that will work better. The following is a quick look at the good and not-so-good sides of FHA loans.
The Good
If you’re a first-time homebuyer, or you don’t have thousands of dollars in the bank for a down payment, then there’s a very good chance that an FHA loan will be an excellent option. It might also be a loan program worth pursuing if you have a credit score that could use some improvement. These are some of the reasons an FHA loan might be worth considering.
- It’s affordable – An FHA loan usually only requires a 3.5 percent down payment. While that’s still a lot of money, it’s far less than a conventional loan. If you went the conventional route (the typical 15- or 30-year mortgage), you would have to put down anywhere from 10 to 20 percent. But there’s a chance you might not need a down payment as all. FHA rules allow for family members, friends and others to “gift” the down payment. You usually won’t find that with conventional loans.
- You don’t need outstanding credit – If you have a low credit score – as low as 580, in many cases – you might be able to qualify for an FHA loan. Conventional loans usually require at least a 620 score. If your score is between 500-579, there’s a chance you could still get an FHA loan. But you’d have to put 10 percent down.
- Flexibility regarding dwellings – You could possibly obtain an FHA loan if you’re not looking for a typical house. For instance, you might be able to use it to buy a condominium, or a manufactured home that’s affixed to a permanent foundation.
The Not-So-Good
All types of loans have drawbacks, and FHA loans are no exceptions. These are some of them.
- You have to pay insurance premiums – Most people who get FHA loans have to pay insurance premiums each month. But once they build 20 percent equity, that requirement usually goes away.
- No vacation or investment homes – You can only use an FHA loan for your main residence. You’ll have to get another kind of loan if you’re looking for a vacation or investment home.
- No flipping – The home you’re buying has to mee minimum health and safety standards. It also has to be sound from a structural perspective. You won’t be able to purchase a “fixer-upper” to flip with an FHA loan.
Gem Home Loans team members look forward to the chance to show you why we’re different from other mortgage companies in Oakland Township, Michigan. Contact us online or call (248) 780-1030 for more information.
