Colorado FHA Loan
One of the most important events in a lifetime is buying a home. The toughest part is knowing where to start, but that's not where the problem ends for the average home buyer. Beyond purchasing the right home, you have to find the right loan that works for you!
If you have a challenged credit record, then finding the right financing solution can be even more difficult. That's where the Colorado FHA loan comes in. The Federal Housing Administration has established affordable home loans for exactly this purpose -- to help everyone have the opportunity to purchase a home, even if you've had past credit problems. Now you can also take advantage of the benefits that result from applying for a Colorado FHA loan. You chances for being approved and buying your dream home are greatly improved. The FHA loan product even has interest rates which are very comparable with the conventional loan program rates.
FHA underwriters don't consider your credit scores for determining if someone can actually qualify for a loan or not. This is a blessing because it helps people with lower-average credit, or no credit at all, get great Colorado FHA interest rates.But the benefits don't just fit the needs of credit-challenged buyers alone. In fact, a Colorado FHA loan can satisfy almost any home buyer. The application procedure is quite simple and is very buyer friendly. So sure, while one major purpose of the FHA mortgage is to expand home ownership while simplifying the process for taking a loan -- especially for home buyers and home owners who have had past issues that resulted in less than stellar credit -- the loans are also a perfect fit for anyone with outstanding credit too!
FHA was one of the first loans that had guidelines regulating construction and appraisal standards. There is always a property inspection first that is designed to protect unsuspecting consumers from buying a home that turns into the proverbial "money pit." The basic construction and quality standards for a home must be met before underwriting approval can happen. Although the FHA has higher property standards than most conventional loans, they are far more flexible than most conventional loans too. If you are planning to buy a house that does not meet the minimum FHA standards, then you will have to ask yourself whether it is worth buying and potentially investing tens of thousands of dollars in improvements in.
There was a time when FHA had capped interest rates, but since 1983 that has changed. Although the FHA loan rates are no longer capped, they are still traditionally lower than most conventional loan rates. You will probably ask why FHA rates are so low. The answer is that the lender is insured by HUD against a borrower default for the entire duration of the loan. Due to this added security in loan repayment, a Colorado FHA lender is at less risk and can offer low rates that compare or surpass conventional loan rates.
The loan amount that you can qualify for under the Colorado FHA loan will be based on your total income and the area you purchase in. According to the Colorado FHA guidelines, your total payment amount (PITI) should not exceed 29% of your gross monthly income without an underwriter's approval. If you are married and both you and your wife are working, then it will be calculated using both incomes, provided your spouse is a co-applicant. This actually ensures that you are able to pay your FHA loan without any difficulty; it is also is designed to ensure you can afford the house that you are interested in buying.
The FHA Home Loan Advantage
There are many advantages of having a CO FHA home loan:
- The Colorado FHA Loan requires only a 3.5% down payment, which is much lower when compared to conventional loans. FHA also allows gift funds and down payment assistance from hundreds of private organizations and government-funded grant agencies.
- CO FHA loan interest rates are typically lower than conventional loan interest rates, especially in a rising interest rate market.
- The Colorado FHA underwriting guidelines are far more flexible when compared to underwriting of any other conventional loan guideline.
- Unlike most conventional loan programs, Colorado FHA loan programs don't have reserve requirements.
- In almost all of the cases, a home seller can contribute up to 6% towards the closing costs on a CO FHA loan.
- There is never a prepayment penalty on any Colorado FHA loan; it can be refinanced or paid off at any time. If you are able to pay off your FHA loan early, then you may be entitled to an upfront MIP refund.
- Colorado FHA loans are assumable. This gives you tremendous flexibility as rates increase -- if you have a low rate, you can ask for a higher sales price in exchange for assuming a low rate loan, while saving another home buyer tens of thousands of dollars!
- CO FHA Mortgage is easy to refinance. If the rates go lower, you can obtain a fast and easy FHA Streamline Refinance to lower your rate.