Can an FHA Loan Help Me Buy One of the Lake Michigan Homes for Sale?
Although the FHA had lost popularity after the financial crisis of 2008, it is still a valid resource for qualified home buyers to receive help getting into one of the Lake Michigan homes for sale.
It's important to understand the position of FHA in the home buying process.
They don't actually provide the loan; they simply insure the loan for you so lenders feel more confident offering you a mortgage.
So what are the advantages of an FHA-backed mortgage loan?
Lower Down Payment
Those who qualify for an FHA insured loan on Lake Michigan homes for sale are required to pay a significantly lower down payment than is traditional required. The standard down payment required is only 3.5% of the purchase price, and there have been cases where individuals have been approved for a loan with nothing down.
FHA's insurance to lenders greatly minimizes their risk. The element of risk is generally offset with higher interest rates, but because FHA is in your corner this is not an issue.
Lower Required Credit Score
Creditors generally require a credit score of at least around 640 or higher. FHA-insured loans are different, and there is a high approval rate for Lake Michigan real estate mortgages for scores which fall below 600. Consideration of Credit Worthiness
There are a number of FHA applicants interested in houses for sale on Lake Michigan who neither have good credit nor bad credit; they have absolutely no credit history what-so-ever. In this case, lenders are able to consider phone bills, utility and rent payments, timely paid auto insurance premiums, and other regular types of billing which do not typically report to the major credit bureaus.
Flexible Funding Requirements
For a traditional mortgage a lender will generally require that you have demonstrated an ability to budget, save, and generate revenue on your own in a responsible manner. They do this by verifying bank accounts, investment accounts, and more and by analyzing your spending, your income, and the difference between the two. They want to be sure that you are the source of all the funds in your account - that they were not inherited or given to you by any other source besides your own earnings.
FHA-backed loan applicants are not under as much scrutiny. External financial assistance such as inheritances, gifts from friends or family, and support from a local charity are accepted as a valid down forms of down payment Lake Michigan homes for sale.