If you're trying to decide whether to rent or buy FHA homes, you are not alone. You may be tired of renting but unsure if you can get a mortgage.
If you're trying to decide whether to rent or buy FHA homes, you are not alone. You may be tired of renting but unsure if you can get a mortgage. A home from the Federal Housing Administration (FHA) may present an opportunity for you to be a homeowner.
If you want to buy an FHA home, you probably are looking at foreclosed homes that are being resold through the U. S. Department of Housing and Urban Development (HUD). Most of these homes had loans insured by the FHA so when the previous homeowner defaulted on the mortgage, the government paid the lender and took possession of the home.
When weighing the decision to rent or buy an FHA home, you should first consider the perks of FHA homes. First, they are often priced below market value because HUD needs to sell them as quickly as possible. Second, you can typically use an FHA loan to buy foreclosed homes. These loan programs require a down payment as low as 3.5 percent, compared to traditional financing, which typically requires a down payment of 20 percent. Additionally, these loans have low interest rates and flexible terms. If you're still not sure whether you should rent or buy FHA homes because you are worried about your credit history, many FHA loan credit requirements are more lenient that traditional lenders'. FHA credit counselors will even help you improve your credit score.
Another great thing about FHA loans is that they're assumable. What this means for you is that if you purchase a home where the homeowner obtained an FHA loan prior to 1986, you'll be able to just take over the loan without having to apply for the program yourself.
The drawbacks to FHA homes is that they are sold in "as-is" condition so they may need maintenance or costly repairs. You can finance repairs in specific FHA loans, yet you'll want to be sure to get a home of interest inspected before you make a bid on it. You also must work with a HUD-approved real estate agent to bid on HUD homes. You cannot buy one by yourself. This may not be such a downfall as the agent helps protect you from making a purchase you will regret and guides you through the process. To learn more about FHA homes and the bidding process, start here .
If you think you want to buy an FHA home, but want to compare them to other homes on the market, go to RealtyNow to get free real estate listings.