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Struggling to Get Approved Because of Your Income? 5 Reasons to Consider a FHA Loan

Struggling to Get Approved Because of Your Income? 5 Reasons to Consider a FHA LoanBuying a home isn’t cheap. But if you’re determined to become a homeowner, the FHA home loan program can help. This loan program, ideal for first-time buyers with low incomes, can help you to build your credit and make home ownership a reality.

So why should you consider an FHA loan? Here are just a few ways you’ll benefit from these government-backed mortgages.

You Can Get Approved With Just 3.5% Down

Traditional mortgage lenders typically require you to pay 20% down on your mortgage, or 5% if you have good credit and agree to pay mortgage insurance premiums. But for a lot of younger people with lots of debt and low incomes, even a 5% down payment is an unrealistic burden. With an FHA loan, you can be approved for a mortgage with a down payment as low as 3.5% – which means a $200,000 home can be yours for as little as $7,000 down.

You Can Get A Loan Even With A High Debt-To-Income Ratio

Standard mortgages are difficult to get if you have a high debt-to-income ratio. Typically, lenders will want to see that your mortgage costs will consume no more than 28% of your income, and your total payments toward debts from all sources will be no more than 36% of your income. But with an FHA loan, the maximum DTI is 57%, although it’s lower in some cases.

You Can Qualify With A Low Credit Score

If you have a credit score under 700, you’ll pay higher interest rates on typical mortgages – and if it’s below 660, you may not get approved at all. But with an FHA mortgage, you can get approved for a 3.5% down payment with a credit score as low as 580 – or lower, if you agree to a 10% down payment.

FHA Closing Cost Regulations Are Better For Low-Income Buyers

FHA loans have different closing cost regulations than traditional mortgages. With an FHA loan, you can bundle closing costs into the mortgage or even use gift funds for 100% of the closing costs. That means home ownership is more accessible for people with lower incomes.

An FHA Loan Can Help You Find A Good Home

With most mortgages, you’re free to buy any home you wish as long as you stay within a set price range. But with an FHA loan, any home you buy must be habitable, sanitary, and safe – otherwise the FHA won’t approve your loan. That means using an FHA loan will ensure you get a good home.

Buying a home with an FHA loan is a great way to become a homeowner if a traditional mortgage isn’t an option for you. Call your local mortgage professional to learn more.

Why Purchasing A House In 2022 Is Smart Despite Inflation

Why Purchasing A House In 2022 Is Smart Despite InflationAnyone who has paid attention to the news has likely noticed that inflation is a constant headline. Inflation takes place when the average cost of goods and services begins to rise. There are a number of reasons why inflation has been rising at record rates during 2021 and 2022.

The federal government has pumped money into the economy, and supply chain constraints have led to a shortage of goods. This means that everything from cars to groceries has gotten more expensive. Many individuals and families are looking for ways to save money, and this might mean putting off homeownership dreams. Even though housing prices have gotten more expensive as well, inflation should not stop someone from trying to buy a house in 2022.

Owning A Home Offers Financial Security

One of the biggest reasons why people should consider buying a house in 2022 is that owning a home offers financial security. Those who lock in a fixed-rate mortgage could pay the same mortgage premium for decades. Even though it is possible that real estate taxes and home insurance rates could rise, the mortgage payment will stay the same. Individuals who stay in their houses for 30 years might see their income go up as they get promoted at work. This means that they will have more money to put elsewhere with a consistent mortgage payment.

Those who put off owning a home could see their rents go up every year. Many apartment complexes and landlords raise the rent consistently to keep up with rising inflation. Becoming a homeowner simply offers more financial security. 

Owning A Home Acts As A Hedge Against Inflation

When inflation goes up, the average value of a single dollar goes down. It is critical for everyone to think about how they can hedge this risk, which means putting their money where it is unlikely to lose value. Putting that money in a home is a great decision. Because housing prices could increase, the value of the money in that house will go up as well. Furthermore, with interest rates on mortgages extremely low, buying a house becomes an even better inflation hedge. The best way to combat inflation is to have a fixed expense, such as a mortgage payment.

 

Buying A Second Home As A First Home: What To Know

Buying A Second Home As A First Home: What To KnowMany first-time homebuyers are having a difficult time finding the right purchase. Therefore, a new trend is catching on. Some people are renting in the city, where property values are more expensive. Then, they buy a vacation home in the suburbs. Is it smart to buy a second home as a first home? 

The Advantages Of Buying A Vacation Home First

There are several advantages that come with buying a vacation home as a first home. First, buying a vacation home in the suburbs is usually less expensive than purchasing a house in the city. Furthermore, first-time homeowners can rent out their vacation homes the majority of the time, helping them cover monthly mortgage payments. Then, as the value of the vacation home rises, first-time homeowners build equity they can use to purchase a more expensive home in the city later. This can also help people save money on the cost of a vacation. 

Interest Rates On Vacation Homes Might Be Higher

At the same time, interest rates on vacation homes might be higher. Homeowners interested in getting the best interest rates need to live in the home they are buying. If they are not living in that specific home, lenders may charge a higher interest rate. Furthermore, first-time homeowners might have to put more money down to qualify for that loan. 

Managing A Vacation Home

First-time homeowners also have to think about how they will bring in rental income. It might be helpful to work with a property management company that can handle this from start to finish. Or, services such as VRBO or Airbnb might be helpful. Homeowners need to have a plan for how to maximize rental income. The more the home is rented out, the easier it will be to afford the mortgage payments.

Have An Emergency Fund Set Aside

First-time homeowners still need to have an emergency fund set aside for the vacation home. What happens if the roof needs a repair? What happens if the HVAC system has to be replaced? Homeowners need to think carefully about how they can cover these expenses. Not all of them are covered by home insurance, and some of them can cost thousands of dollars.