Do you have questions on your mind regarding FHA loans that are unanswered? You may be unclear about what the FHA and FHA loans are. If you’re looking for valuable information on FHA loans or refinancing your existing FHA loans, then these top 5 frequently asked questions on FHA loans will help you make a more informed decision.
Top 5 Frequently Asked Questions About FHA Loans: FHA FAQs
Here are the top 5 FAQs on FHA loans.
1. What is the FHA?
FHA stands for Federal Housing Administration. It’s a United States government agency that offers mortgage insurance to lenders that are FHA-approved. This kind of insurance protects lenders against losses that may arise with mortgage defaults. In cases where a borrower defaults on a loan, the Federal Housing Administration pays the lender a specified claim amount.
2. Who can benefit from FHA loans?
Individuals with low income and credit scores can obtain an FHA loan with a lower down payment. However, the Federal Housing Administration doesn’t lend money to the borrower to take on a mortgage or to buy the house. Instead, the borrower pays a monthly or annual mortgage insurance premium to the FHA to insure the loan that the lending institution issues to the borrower. In case of default, the FHA would step in to cover the payments, which minimizes lender’s financial risk.
3. How can the FHA help with buying a home?
The FHA insures mortgage insurance to lenders, thereby boosting their confidence for lending home loans to borrowers who have low credit scores. In order for easier approval of home loans by the lender, the FHA covers the lender’s financial risk.
Read Also: Top 4 Important Facts about FHA Loans
4. What is Mortgage Insurance?
Mortgage Insurance is an insurance policy that protects a title holder or mortgage lender if the borrower defaults on payments due to death or becomes unable to meet the contractual obligations of the mortgage. Mortgage Insurance can also be referred to as Private Mortgage Insurance (PMI), Mortgage Title Insurance, and Mortgage Life Insurance. Mortgage Insurance helps compensate lenders or investors for losses when borrowers are unable to pay mortgage loans to their lenders.
5. Will I be able to refinance my existing FHA loan?
Yes, FHA Streamline Refinancing is a mortgage product designed for existing FHA customers who want to refinance their existing mortgage loans. FHA Streamline Refinancing speeds up the home refinancing process by relying on paperwork from the original loan rather than recreating documentation with new underwriting. There is no appraisal required for this kind of refinancing, either. FHA Streamline Refinancing can reduce your monthly payments, loan term, or even change the loan from an adjustable-rate to a fixed-rate mortgage. In some cases, borrowers may not need to provide income, employment, or credit verification.
If you’re looking for a mortgage lender in Boston, Worcester, Shrewsbury, and Peabody, MA for an FHA home loan, Drew Mortgage Associates can help! Drew Mortgage Associates is a Boston mortgage lender that can assist you with mortgage loans or refinancing to a low-interest rate or reduced term that best suits your financial goals. Our mortgage planners are highly trained professionals that can identify the best refinancing program that fits your current economic condition.