Residents of New Orleans LA can choose two routes when they decide to secure a mortgage loan. Conventional loans and FHA loans offer individuals the opportunity to purchase a home with a certain down payment. When choosing a loan, a person has to decide which one is appropriate for them, and they must look at the criteria and requirements for each loan to determine if they qualify. FHA loansare often more suitable for people with higher debt, limited credit history or less money to use as a down payment.
A lender requires a borrower to put down a certain amount of cash that signifies their portion of equity ina home. Home buyers with lower cash levels to use on a down payment will be happy to know that an FHA loan requires a smaller cash outlay. An FHA option allows a home buyer to put as little as five percent equity into an initial home mortgage. This is an ideal option for individuals who would like to use cash for other expenditures such as college tuition or energy bills.
Mortgage insurance is also a lower cost for homeowners who choose and FHA option. This type of insurance is required by a mortgage lender when less than 20 percent of a total loan amount is made with a down payment. Comparing conventional loans and an FHA loan can be tricky, so it's advisable to ask a professional lender for advice when choosing which option is best for them.
When a person is considering the difference between the rates of a conventional loan and FHA loan, they usually discover that a government-backed loan is competitive with a conventional one. This benefit is a positive aspect for individuals who may have no credit history or not as much money to spend when they secure a mortgage loan.
Credit score regulations are also more lenient when a person applies for a government-backed loan. An FHA option is easier to secure when a person has little or no credit history. Individuals with bankruptcies or foreclosures are also able to secure a loan in a shorter timeframe after those type of incidences occur. Of course, an individual cannot have poor credit, negative marks and expect to secure this type of loan. A borrower must still have the ability to show that they are credit worthy and will stick to a contract that they sign.
It pays to get advice when an individual is shopping for a home mortgage. Contacting a professional representative at Sun Mortgage Funding is a positive step towards owning a home and having it financed at an excellent rate.