Different FHA Loans for Different Needs
July 25, 2023
There are some home loan options some won’t consider. A shorter loan term is one. In an era where lower monthly payments seem to be the priority for some borrowers more than saving money over the entire course of the loan, a longer loan term makes sense.
But for some, these are important aspects of the loan to consider. If you can afford to pay more each month on your mortgage, would you do so to shorten your loan term?
The 15-Year Loan Term
Investopedia says one disadvantage of a shorter loan term is that less of your money will go into savings. That may be a concern for borrowers of a certain age and less for others.
If you don’t mind paying the higher mortgage and can realistically afford to do so, a shorter loan term could be an advantage if you want to save more over the entire term.
Younger borrowers with less disposable cash may be less inclined to choose this option, but more experienced borrowers may think twice before deciding which way to go.
A Rehab Loan vs. a Purchase Loan
Some borrowers get hung up on the type of loan in ways they did not expect. What happens if you fall in love with a house only to find it cannot pass the FHA appraisal process?
In some cases, this may not be a lost cause if the home can be renovated with an FHA 203(k) rehabilitation mortgage.
If the FHA purchase loan doesn’t work for a property that needs repairs, the rehab loan option might be the better bet.
Condo vs. Townhouse Versus Manufactured Home
Some are surprised to learn there are separate FHA loans for each property type listed in the headline above.
Why? Because the considerations for each type of property are different. Condos have different underwriting and loan approval guidelines than manufactured houses. And that is also true of townhouses to a certain extent.
Is There an FHA Farm Loan?
Some hear about the FHA farm loan option and wonder if that means they can purchase a farm business using an FHA mortgage. This is not true. A farmhouse may qualify for an FHA mortgage but only the residential portion.
No funds are offered to purchase farm outbuildings, equipment, or other items that are not residential real estate. However, if you want to live in a farmhouse as your primary residence, an FHA mortgage may be possible.
Why not talk to a participating FHA lender about your needs and see which FHA home loan is right for you?
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But for some, these are important aspects of the loan to consider. If you can afford to pay more each month on your mortgage, would you do so to shorten your loan term?
The 15-Year Loan Term
Investopedia says one disadvantage of a shorter loan term is that less of your money will go into savings. That may be a concern for borrowers of a certain age and less for others.
If you don’t mind paying the higher mortgage and can realistically afford to do so, a shorter loan term could be an advantage if you want to save more over the entire term.
Younger borrowers with less disposable cash may be less inclined to choose this option, but more experienced borrowers may think twice before deciding which way to go.
A Rehab Loan vs. a Purchase Loan
Some borrowers get hung up on the type of loan in ways they did not expect. What happens if you fall in love with a house only to find it cannot pass the FHA appraisal process?
In some cases, this may not be a lost cause if the home can be renovated with an FHA 203(k) rehabilitation mortgage.
If the FHA purchase loan doesn’t work for a property that needs repairs, the rehab loan option might be the better bet.
Condo vs. Townhouse Versus Manufactured Home
Some are surprised to learn there are separate FHA loans for each property type listed in the headline above.
Why? Because the considerations for each type of property are different. Condos have different underwriting and loan approval guidelines than manufactured houses. And that is also true of townhouses to a certain extent.
Is There an FHA Farm Loan?
Some hear about the FHA farm loan option and wonder if that means they can purchase a farm business using an FHA mortgage. This is not true. A farmhouse may qualify for an FHA mortgage but only the residential portion.
No funds are offered to purchase farm outbuildings, equipment, or other items that are not residential real estate. However, if you want to live in a farmhouse as your primary residence, an FHA mortgage may be possible.
Why not talk to a participating FHA lender about your needs and see which FHA home loan is right for you?
------------------------------
RELATED VIDEOS:
You're Almost There When You Get Your Loan Approval
Learn About the Mortgage Insurance Premium (MIP)
Pre-approval Starts the Mortgage Process
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