Since the collapse of the sub-prime lending in 2009 FHA loans have become very popular to finance Columbus OH homes for sale.
So what exactly are FHA loans?
They are home loans issued by normal banks, but secured by a guarantee of the federal government (HUD). This means you do not borrow money from the federal government, but from your bank. The Feds just guarantee the loan in case you default.
FHA loans were unpopular during the height of the sub-prime mortgage market. Who would want to deal with the government, when easy money was available.
Since the easy money has disappeared and banks became ultra conservative when it comes to loaning their money, FHA loans have become very popular in the past couple of years. As a matter of fact, FHA loans account for more than 80% of all home mortgages these days.
Here are five reasons why FHA loans are the preferred option for many buyers of Columbus OH homes for sale and why you should consider an FHA loan for your home purchase.
- FHA loans are for everyone, not just for low income home buyers. There is no upper income limit, and you don’t have to be a first time home buyer to qualify for an FHA loan.
- FHA loans are for all types of houses. When you buy Columbus OH homes for sale you probably won’t hit the upper limit of FHA loans, which has been raised to around $800K. You can also use FHA financing for fixer uppers and houses that need repair. Standard FHA loans allow for a repair allowance up to $5,000. There’s also an FHA rehab loan (203k) that can be used to finance remodeling project that need more than $5K in work.
- FHA loans are easy to obtain, certainly easier than conventional financing. Despite the government’s rigorous documentation requirements, banks are a little more lenient when it comes to underwriting FHA loans, because the Feds insure your loan.
- Low down payment required. When you purchase Columbus houses with FHA loans you only need to pay a down payment of 3.5%, while conventional loans require 10% or even 20% down. This makes homes significantly more affordable for many buyers.
- FHA loans are assumable. Now this is BIG! If interest rates go up in the future, say from the current rate of 4.5% to a rate of 7% or 8%, your house will be much easier to sell and the value of your home will increase, because a prospective buyer can assume your low interest FHA loan.
I certainly recommend that you apply for an FHA loan to finance the purchase of your new Columbus home. Lock in the exceptionally low interest rate today and benefit from low monthly payments and a very low down payment.
Do not hesitate to call me, if you need the name of a local, Columbus FHA lender. I have banks and mortgage companies on my team that can give you a pre-approval letter the same day and close your FHA loan in as little as 3 weeks.
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Posted by: Susanne Novak, ABR, FIS, GRI
Columbus Real Estate Agent helping First Time Buyers.