With mortgage rates being at description lows, many habitancy are ready to purchase a home or refinance their existing mortgage. If you are one of the many Americans who want to take benefit of one of the best times in many generations to buy or refinance, you are probably weighing the loan options that are ready to you.
If you are a first-time home buyer or have not plan about your existing mortgage in years, it may be hard to tell which loan type will be the best for your situation.
conventional Vs Fha Loans - Know Your Options
Two of the most common loans right now are conventional, fixed-rate mortgages & the government-backed Fha loan. Each loan offers unique features that benefit dissimilar situations. Knowing some of the advantages and drawbacks of both loans will help make your decision easier:
Similarities between conventional & Fha loans
* Both loans currently offer some of the lowest rates in history. 15-year conventional fixed-rate mortgage rates are at an all-time description low. Fha rates are slightly higher but in general, rates are competitive and comparable.
* The most popular Fha & conventional loans are fixed-rate mortgages. That means the interest rates won't change for the life of your loan.
* However, both conventional & Fha offer Arms (adjustable rate mortgages).
Advantages of an Fha Loan over a conventional Loan
* prestige qualifying criteria not as precise - prestige scores as low as 580 now qualify for an Fha loan. Additionally, your proper debt-to-income ratio is higher on an Fha. Meaning, if the estimate of debt you carry is relatively high compared to your income you may still qualify for an Fha loan.
* Low down cost required - Fha loans ordinarily want as slight as 3.5% down on the purchase of a home. Government requirements also highlight some of the lowest amounts needed to close a loan, potentially leaving more money in your pocket at closing.
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