Private mortgage insurance (PMI) can be an expensive requirement for your home loan, as it adds more to your monthly payment costs. This is a safeguard that your lender will take out to cover a portion of the amount you borrowed in case you default. Up Next: P.I.T.I.: Understanding The Parts Of Your Mortgage Payment […]
What You Need to Know About FHA, Missouri
What do you need to know about FHA (Missouri)? For starters, FHA stands for Federal Housing Administration which is a government agency that supports home ownership and stability in the mortgage market. FHA started as the “New Deal Program” during the Great Depression. FHA also works as part of HUD which stands for, Housing and Urban Development.
Originally FHA mortgages have been aimed for borrowers with low to moderate income or first-time home buyers. Over the past years, FHA (Missouri) has become prevalent among all types of borrowers. This type of mortgage allows people to get a mortgage with a minimum down payment. Compared to other mortgage assistance programs, FHA is available to any person who is able to meet the minimum income and credit requirements. Another advantage to using this mortgage program, is that it is easy to refinance when rates drop. As long as you are up to date on your payments you can qualify for FHA Streamline Refinance which doesn’t require an appraisal, credit check, or documentation. For individuals who buy a fixer-upper home, FHA gives you the option to borrow money through HUD 203 (k) loan and have it rolled into the purchase mortgage.
There are some disadvantages when choosing FHA (Missouri). One drawback is there are limits on the amount you can borrow which will differ by region. Another factor is the higher costs due to upfront and ongoing fees for FHA Mortgage Insurance. As a mortgage shopper, you want to also consider that the interest rates will not be set by FHA, but will vary from lender to lender. So it may be a good idea to do research for an FHA Missouri lender that fits best for your financial situation. Another thing to keep in mind is that even though FHA requirements allows you to have a FICO credit score as low as 500, some lenders will request a credit score of at least 620-640. Credit score impacts your interest rate, so if you have a low credit score you will have to pay a higher interest rate. So with this said, you might want to consider finding a lender to work with you to improve your credit score before seeking a mortgage. If you are a borrower that is looking to buy a high end home, FHA is not the best option. Call a lender today to discuss which mortgage program will work best for you for the long term