Nothing’s more exciting than getting ready to finally become a homeowner. After years of hard work and hope, the keys to your very own castle may  finally be within reach. However, there are dozens of obstacles in the way of any young homebuyer, which can include a low credit score or a lack of credit history from renting.  Read on to learn more.

Why first time homebuyers seek an FHA Loan to finance their dream home

– and how to get help

It can seem daunting to realize that even if you have the money to pay for a down payment and cover your mortgage each month, you still might not be able to secure that all-important mortgage. Buying a first home is a challenge.

Don’t despair – you can still find your dream home!

Government backed loans

FHA loans are government-backed loans that are designed to help first-time homebuyers and individuals with lower credit scores purchase homes.

Insured loans

These loans are insured by the Federal Housing Administration (FHA), which means that the lender is protected against losses if the borrower defaults on the loan.

FHA loans are a popular option for many homebuyers because they often have more lenient credit and income requirements compared to traditional loans.

In this article, we will discuss what an FHA loan is and why homebuyers should use a mortgage broker to secure an FHA loan.

What is an FHA Loan?

An FHA loan is a type of mortgage that is insured by the FHA. The FHA was created in 1934 to help stimulate the housing market during the Great Depression.

Why insurance matters

The FHA does not lend money directly to borrowers. Instead, it insures loans that are issued by approved lenders.

This means that if a borrower defaults on an FHA loan, the FHA will reimburse the lender for the loss, which helps encourage lenders to take a chance on first-time homebuyers.

Why are these loans popular?

FHA loans are popular because they have more lenient credit and income requirements compared to traditional loans. Borrowers can have a credit score as low as 580 and still be eligible for an FHA loan.

Debt to income ratio

Additionally, borrowers can have a debt-to-income (DTI) ratio of up to 43%, which is higher than the 36% DTI ratio that is typically required for traditional loans.

Lower down payment

FHA loans also require a lower down payment compared to traditional loans. Borrowers can put down as little as 3.5% of the purchase price of the home.

Buying a first home – The finance example

This means that for a $200,000 home, a borrower would only need to put down $7,000 instead of the $40,000 that would be required for a 20% down payment on a traditional loan.

Why Use a Mortgage Broker to Secure an FHA Loan?

Securing an FHA loan can be a complicated process, which is why it is often beneficial to use a mortgage broker, such as District Lending.

The support of a licensed professional

A mortgage broker is a licensed professional who works as an intermediary between borrowers and lenders.

Access to many more lenders

Mortgage brokers have access to a wide range of lenders, which means that they can help borrowers find the best loan options for their specific financial situation.

How can a mortgage broker help?

There are numerous reasons why you should consider seeking FHA loans through districtlending.com. In this article, we’ll explore just a few of these reasons.

Professional access to multiple lenders

One of the main benefits of using a mortgage broker is that they have access to multiple lenders, so they can help borrowers find the best loan options for their specific financial situation.

The help you need when buying a first home

Mortgage brokers work with a variety of lenders, including banks, credit unions, and private lenders, meaning they can help borrowers find the best loan terms and interest rates.

Expert advice

The expert advice of a mortgage broker can ease the process of accessing an FHA loan, especially for younger homebuyers who may not have experience with mortgages.

Mortgage brokers have a deep understanding of the various loan options that are available and can provide valuable advice to borrowers. With your mortgage broker, you can review the pros and cons of different loan options, and your expert broker can provide guidance on which loan is the best fit for your specific financial situation.

Accelerated process

Another essential aspect of working with a mortgage broker is that they can exponentially speed up the process.

Securing an FHA loan can be very time consuming: there are many steps involved, including filling out an application, gathering financial documents, and working with a lender to secure the loan.

When working with a mortgage broker, borrowers can save time because the broker handles many of the administrative tasks involved in securing the loan. This means that borrowers can focus on other aspects of the homebuying process, such as finding the right home.

Expertise in negotiations

Finally, mortgage brokers have the expertise to negotiate on behalf of their clients.

They can negotiate with lenders to secure better loan terms and interest rates, so you can save thousands of dollars over the life of your loan.

If you’re in the market for an FHA loan, a mortgage broker is your path to success

FHA loans are a popular option for many homebuyers, especially those with lower credit or with no credit history, but the process can still be complicated and time-consuming.

That’s why a mortgage broker can be so helpful while you pursue this particular type of loan, as they have the experience and negotiation skills to get you the very best rate.

When you’re finally ready to take the leap toward home ownership, do so with a compassionate expert at your side: reach out to a mortgage broker and begin the process today.

FURTHER READING ON BUYING, SELLING AND MANAGING A HOME

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Picking a real estate agent – Be in the know

Selling a property for the first time – What not to do

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