Picking a home loan that fits your needs and makes your home purchasing experience easier can be quite the daunting task to any home buyer. To add to the confusion, there are various programs and loans out there offered to choose from, and finding the best one for your situation can seem impossible.
FHA or Standard (Conventional) Mortgage Loan: Which Should You Choose?
When choosing your loan, it can often come down to two overall types of loans before you get really specific, an FHA Loan of a Standard Loan. Below we have listed the major differences between an FHA Loan and a Standard (Conventional) Loan, which hopefully will help you in the choosing process.
1. Standard Mortgage
A Standard mortgage is a conventional option which will require a good credit score and an interest rate that will be adjusted depending on your financial standing and down payment. There are more options available, a larger number of lenders and more loan programs for a standard loan.
2. FHA Mortgage
An FHA Mortgage loan is not issued or mortgaged by the FHA, in fact, they are underwritten by them. This is specifically done for loans which are risky and lenders are not willing to fund it.
Standard Mortgage or FHA Mortgage?
Figuring out the pros and cons of both of these types of loans will give you a clear objective of which will suit your goals better. Usually, an FHA mortgage loan needs certain qualifications to be eligible for it; an FHA Loan is more suitable for those buyers who have poor loan credit. Also, the interest rates are lower compared to standard loans with a lower threshold for down payment, and a higher loan limit.
On the other hand, with a standard mortgage, you have more flexible options, with different time spans. Since the credit score requirement is higher, the number of lenders available are also higher. A standard loan can be used on different types of properties, whereas an FHA mortgage prescribes the eligibility of the property.
The bottom-line is that both types of loans have a different set of requirements and benefits. If you’re eligible for both types of loans, hiring expert help to gauge which is more suitable for you would be beneficial. Drew Mortgage Associates, a leading mortgage company in Boston, MA with expertise in mortgage lending, can ensure that your application is in order, and help you understand which loan program will best suit you and your needs