Have you noticed that there are people who always try to take you down? Yes, the same thing applies to FHA loan which is a boon to millions of homebuyers in the US. There are several myths that have been holding people back from choosing FHA. Over the years, the customers have formed an idea that the mortgage is only for economically disadvantaged borrowers. However, this is absolutely not true. There are also different myths related to the link between FICO score and credit history. Unlike many borrowers’ imagination, FHA guidelines call for a certain set of credit requirements. Therefore, you should keep your head out of such myths.
Yes, the house loan works well for homebuyers with less than perfect; however, the misconceptions need to be debunked. To many customers’ surprise, self-employed people can opt for FHA loan. Yes, it gets tougher at a stage but it is not impossible at all. Also, the loan does not take a long period to get approved and there is no nerve-wracking paperwork involved. The rate is similar to conventional loans; hence, you are never losing more when it comes to FHA government home loans bad credit. That’s why here are a few common myths mentioned and take a look below.
Myth #1: Seasonal Employees are not Allowed
The fact is that the FHA loan is ideal for seasonal workers, commission-based salaried individuals, and self-employed people. There is no instant problem from the lender’s end if you do not earn a conventional wage. As long as you can meet the guidelines, you are good to go. All you have to prove is that you have a stable income.
Myth #2: You will Lose Mind over Appraisal Requirements
Only 4 years ago, FHA has changed the appraisal guidelines. Now, “As-is” appraisal is allowed only when there is a little glitch on the property condition. If the FHA appraisals need a few repairs, there are minor defects or cosmetic defects. Yes, you can say that the appraisal requirements are almost similar to conventional loans.
Myth #3: FHA Loan does not Serve its Purpose
In 1934, the housing finance market underwent several hiccups and FHA loan was introduced for this reason. The scenario has changed but it is also serving its designated purpose of protecting people’s shelter. This is still one of the most favored financing options that private lenders cannot offer. The market share increased when the housing crisis surfaced. It is now back to a conventional rate of 18% for buying home loans.
Myth #4: Closing Costs are High
As a closing cost, the loan charges 1.75% upfront and you may think that you have to get this percentage. However, the amount is only included in the loan amount if it is the closing cost. You can relax at the thought that FHA loan does not hike the closing cost or you need to bring it to the table.
Another thing you should remember is that the loan is not only for first-time buyers, either. The second-time home buyers can also get hold of it. Of course, you can get in touch with the professional lenders to get rid of confusions about FHA loan.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.