Morning Glory – MAHudlemeyer Early in the home-buying process, FHA and Conventional may be unfamiliar terms. Read on for a basic comparison of the most commonly used home loans.
The majority of people looking for a home loan will be considereing a conventional loan or an FHA (Federal Housing Administration) loan. For exact interest rates and money down requirements, talk to a lender. For some basic information and simple comparisons, read on.
The Federal Housing Administration is interested in getting Americans into quality housing. After a house is under contract, this loan requires a thorough inspection of the house to check for any safety issues. Interest rates are usually similar to those of conventional loans, but money down requirements are lower.
The good things about FHA loans come with some negative baggage. The demands of the required inspections can make some homes unavailable to buy because of being in poor condition. Foreclosures, for example, are often not an option because they are run down and do not have owners to fix them up for sale. Not only can it be difficult to find a house that qualifies for an FHA loan, it can take some time to identify a lender that is approved to offer FHA loans.
Conventional loans are much easier to work out than FHA loans. Any lender can offer these loans and they are appropriate for nearly any property.
The not so simple things about conventional loans all involve capital. While interest rates are low, money down can be steep. Convential loans come with private mortgage insurance unless a down payment of 20% is offered.
Thses loans are intended for property that could turn a profit for the buyer. These could include rental property or farms.
This is by no means an authoritative guide, but merely an introduction to a few types of commonly used home loans. After reviewing this basic information, you will know what questions to ask when you visit a lender. That lender can offer complete, current information and advice about the type of loan that is most appropriate for you.