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Mortgage loan financing has become more and more difficult for people around the United States and in Santa Fe, New Mexico. The financial markets, the bond markets, and the Federal government buying mortgage backed securities have had negative impact on the mortgage lending markets and made mortgage lending requirements tougher and tougher However, when it comes to mortgage financing in Santa Fe, New Mexico, New Mexico and the US in general one silver lining that still exists for borrowers in FHA mortgage financing. For us here at Mortgage Partners Santa Fe, FHA Loans have become a popular option to offer to borrowers for purchase and refinance transactions.
FHA (Federal Housing Administration) was established by the US government in order to provide mortgage loans and mortgage insurance to people throughout the United States
FHA loans are an effective alternative to other mortgage loans for many reasons, although the guidelines are very similar to conventional loans. The single most compelling reason to use FHA is that you are required to put down only 3.5% of the purchase price. A few of the other reasons why you might consider opting for an FHA loan when you plan to buy a home are as follows:
- Conventional loans have price adjustments for credit scores below 720. The FHA typically has a single rate regardless of loan to value and credit score.
- The down payment for an FHA mortgage loan is less when compared to a conventional mortgage loan. Conventional mortgage loan lenders require a minimum of 5% down payment of the borrowers own funds. Independent mortgage insurance companies have higher standards for MI. However FHA loan down payment requirements can be as low as 3.5% of the cost of the home. Depending on the criteria the down payment can be set up a gift from personal relative.