Obtaining a Federal Housing Administration loan is easier than ever, thanks to a wealth of financial institutions around the country that specialize in these federally backed home loans. So, if you're buying a home for rental purposes but don't have the collateral to make it happen, an FHA loan may be right up your alley. With a little bit of planning, you can get the building of your dreams at a very reasonable price.
When you begin shopping for an FHA house loan, there are a few things that you should take notice of. Since these loans are backed by the government, many things remain the same regardless of which lender you choose. You'll need to look at things like:
1. Interest rate, including any points you need to buy down that rate
2. Terms of the loan, including early payment penalties and mortgage insurance requirements
3. Credit and financial restrictions tied to the loan
Understand the terms and conditions of a Federal Housing Administration home mortgageThe first thing you need to do before trying to secure an FHA home loan is to understand what this type of loan entails. You need to meet the criteria for income and credit score, and come up with at least a small down payment to secure your property. The more you know about the process, the better off you'll be in the long run. HUD loans can be used for multi-family properties up to 4-plexes, which offer great income potential.
Department of Housing and Urban Development website as well as the FHA Info site to get a feel for the types of purchases that are possible through a government-backed FHA loan.
Shop around for the FHA mortgage provider with the best interest rate availableThe next step in obtaining a FHA house mortgage is to shop around for the best interest rates. Interest rates change daily, so it's important to keep that in mind when looking for quotes. You may be able to predict where the market is headed by paying attention to the national news, and then locking in your rate with a lender as soon as you get a rate that works for you.
Start close to home when looking for an FHA loanAnother good idea when shopping for a Federal Housing Administration home loan is to start with the institutions where you do your business and personal banking. They may be able to offer you even better deals, especially if you can get the payments automatically deducted from your checking or savings account each month. Having a good history with a bank may help you get a better deal.
- All FHA home mortgage providers must adhere to certain federal guidelines in order to stay in business, so be wary of any provider that offers something very different from the other companies.