Mortgage Miracles
How Do Conventional and FHA Loans Differ?
The two of the most popular home loan choices are conventional loans and FHA loans. Both of the loans have different benefits to offer a borrower, which we will try to conclude here.
Before you dive into the options world of mortgages, you at least have a general idea about both of these loans.
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FHA Loan: Benefits You are not required to pay a big amount of down payment. You are allowed to pay 3.5% of the loan amount as a down payment to an FHA mortgage lender. FHA loans can especially help those who are dealing with bankruptcy and foreclosure credit issues, for those FHA loans don’t take much time to be approved. Also, FHA loans allow you to enlist one of your relatives or friends to qualify for the loan. Along with this, FHA loans are available for streamlined refinancing.
Specifications-
● Although the interest rate is much lower when compared to conventional loans, to get approved for an FHA loan, borrowers are obliged to pay both the mortgage insurance and monthly mortgage insurance. ● This UFMIP( Upfront Mortgage insurance) fee is 1.75% of the approved loan amount and has to be paid in a premium to FHA. ● Also, one of the major differences between conventional and FHA loans is that FHA loans can only be used for the primary home, which means you will
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not be approved for this loan if you want to buy a second home or an investment property.
Conventional Loan: Benefits Conventional loans are best for those who are looking to buy their second home. That’s why conventional loans require less documentation than FHA loans and take less processing time to be approved. Also, when getting a conventional mortgage loan, you only have to pay a 20% down payment, and also you won’t require to get mortgage insurance. If you want to buy expensive possessions, you can consider getting a jumbo loan. Jumbo is usually obtained through a conventional loan. And also, it is easier to find the best lenders to get the best conventional home loans than FHA loans.
Specifications-
● The minimum for a down payment is 3 percent of your loan amount. If you anyhow pay less than twenty percent, you may have to carry mortgage insurance. ● If you have good credit and a high FICO score, you have more chances to get a favorable rate for a conventional loan.
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● The loan is not insured, so you have to make sure that you have an adequate source of income and do not possess any other debts. ● You have the option to enlist another borrower from your known ones to help you qualify for the conventional loan if you don’t want to go through a new credit check.
ConclusionTo conclude conventional loan vs. FHA loan, we can say FHA loans are well suited for all the borrowers who are going to buy their first homes because a lower credit can’t cause any issue in the loan approval. But on the flip side, the borrower who has a good credit score can get a conventional loan. Another difference between both of the loans is the down payment. FHA loans allow you to pay less down payment than conventional loans. If you want to find the best mortgage loan to buy a house for you, we recommend you to visit the Mortgage Miracle Happen to find the home loan options for you.
www.wedohomeloansforyou.com 298 24st, Site 435A, Ogden Utah, USA
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