Federal Housing Administration loans can be a very good deal for home buyers, especially those who don’t have a lot of cash or whose credit rating isn’t stellar, experts say. FHA loans now account for 20 percent of new mortgages, up from 3 percent in 2006. What’s more, the number of authorized FHA lenders has increased 500 percent in two years.
Other benefits of FHA loans include easy loan modifications for borrowers who fall behind, easy refinancing plans if rates decline, and low rates overall, which don’t rise if the borrower has a low credit score. There are no income restrictions on FHA loans, so even borrowers with good incomes may find them attractive.
FHA loans still require a pre-settlement inspection of the home, but the process isn’t nearly as arduous as it once was, says George Hanzimanolis, past president of the National Association of Mortgage Brokers.
Is this an avenue worth looking into when considering a purchase? It’s definitely worth talking to a mortgage banker about.