Indianapolis Rehab Property

If any of the following situations apply to you, you may be eligible for an FHA-insured loan:

• This is your first house.
• You have a limited amount of money available to be put towards a downpayment.
• You have poor credit.
• You have worries about being qualified for a loan.
• You are trying to keep your monthly payments as low as you can.

What are the interest rates for a FHA-insured loan?
While interest rates vary according to your individual circumstances, FHA-insured loan interest rates are considered competitive by today’s market standards.

How much do I need for a Downpayment?
FHA-insured loans have as low as 3% downpayment. Even better is the fact that the money can come from a family member, employer, charitable organization, or even your personal IRA.

What if I’ve had trouble qualifying for a mortgage?
Since the FHA is the one insuring your mortgage, banks may be able to give you loan terms that are more favorable and allow you to qualify for a mortgage that you previously had trouble qualifying for.

What if I have less than perfect credit?
A stellar credit record is not needed in order to qualify for an FHA mortgage. If you’ve had issues with credit in the past such as bankrupcy or defaulting on loans it may actually be easier to qualify for an FHA loan rather than a traditional loan.

What if I fall on financial hardships during the course of the loan?
The FHA is a long standing institutions that has been aiding the public since 1934. If there are any unforseen financial circumstances that take place during the course of your loan such as losing your job or having medical bills, the FHA has many options that allow you to stay in your home.

What kinds of FHA-insured loans are available?

• Fixed rate loans: This is the most common type of FHA-insured loan. Just as they sound, fixed rate loans keep the same interest rate throughout the duration of the loan. You will be given a monthly mortgage payment amount and that payment will never change so long as you keep the original loan.
• Adjustable rate loans: With an adjustable rate loan, the payment structure can vary depending on the terms of the loan. Usually, the loan is structured so that the first few years allow the borower to make payments at a very low and affordable interest rate. After a set period of time that interest rate will increase to a fair market rate.
• Purchase/Rehab loans: A purchase/rehab loan is designed for an individual who wants to buy a home that needs a lot of work done to it. The FHA will insure a loan that allows you to include the cost of repairs in the mortgage. The FHA bases the loan amount on how much the property will be worth after you fix it up.

How do FHA loans compare to subprime loans?
A subprime loan is udually for individuals who may not have a very good credit history and cannot qualify for a traditional loan. The interest rates on subprie loans are significantly higher due to the above average default risk of the borrower. If you go with an FHA-insured loan, the lenders are often more willing to give you favorable terms because in essence, the federal government is backing your loan. In most cases, FHA loan interest rates are up to 3% lower than a subprime loan.

Most of the subprime loans available are structured as adjustable rate mortgages. These are often unfavorable for borrowers due to the fact that the monthly payment after the rate goes adjustable are often more than the borrower can afford to pay. Most FHA loans are structured as fixed rate loans, giving the borrower security and confidence to know that they will always have the same monthly payment for the life of the loan. In addition, subprime loans are often more costly to process than an FHA loan, costing the homebuyer more in the long run.

If you plan on contributing more than your monthly mortgage payment (pre-paying) towards the loan, then an FHA mortgage is the way to go. Often lenders issuing subprime loans will include clauses in the contract that prohibit or make it very costly to prepay the loan. All FHA loans allow pre-payment with no penalties at any time.

How do FHA loans compare to traditional loans?
Most traditional loans will require the borrower to put a large downpayment (as much as 20%) towards the purchae of the home. In addition, if you have had credit issues in the past, it may make qualifying for a traditioanl loan with a low interest rate nearly impossible. FHA loans can have downpayments of as little as 3% and past credit problems are rarely an issue when applying.

Are borrowers required to purchase Private Mortgage Insurance (PMI) on an FHA-insured loan?
Almost all mortgages that are financed without a 20% downpayment require the borrower to purchase PMI. This goes for all loans, including traditional, subprime, and FHA-insured loans.

Is an FHA-Insured Loan Right For You?
The best way to determine whether an FHA-insured loan is right for you is to compare each loan side by side. Take into account the total cost over the life of the loan and make a decision that is affordable for you. Often times, with the amount of protection and the superior value, the FHA-insured loan emerges as the best choice for you and your financial future.