FHA is an abbreviation for the Federal Housing Administration, which operates under the Department of Housing and Urban Development (HUD). This government organization has been helping people obtain home loans since 1934. What the FHA does is they insure loans so that borrowers can get qualified for a loan easier and obtain lower down payments and closing costs. In short, they help more people become homeowners.
It should be noted that an FHA insured loan is not a loan at all. It is just insurance on a loan for qualified borrowers seeking a new home loan. Typically a FHA insured loan is designed for those who have a poor credit or low credit score, only have a small amount of money for a down payment, have undergone bankruptcy, or have been foreclosed upon in the past. The Federal government will insure the loan, so the risk is lessened for the lender, thus improving the chances for the borrower to obtain a loan.
First Time Homebuyer
For the first time home buyers, an FHA loan in Tucson may be an excellent option. The problem with many first time home buyers is lack of credit history. An FHA loan can not only help with that, but it can also save the borrower a lot of money in the process with its lower interest rates, less money down, and lower closing costs.
Other Uses for FHA Loans
An FHA loan in Tucson is not just for home purchases either. There are options available through the FHA for loans to remodel or fix up a home. It is also especially easy to get approved for a FHA loan to remodel a home to become more energy efficient. A lot of credits are built into making energy efficient home improvement changes to a home.
The final bit of help that the FHA can provide is with reverse mortgages. These types of mortgage products are typically for those 62 years and older who are on a fixed income. These types of loans can convert the home equity into cash for the senior to use on their everyday living expenses. For many this is an excellent option past retirement.
Even with the downturn in the housing market, there are still plenty of options available out there that can help just about any person obtain a home loan, refinance, or home equity loan. The FHA in particular offers a strong helping hand to get many borrowers qualified for better loan options than they would normally be able to get through traditional means. The best part about these types of federally backed loans is that there is no additional to the borrower. All a person needs is to find the right loan specialist or mortgage broker to provide the help needed.
Rob Sanchez is a senior loan officer for Nova Home Loans, a full-service mortgage bank that has helped customers finance their loans for more than 30 years. Financial services include mortgage home loans, first time buyer loans, refinance loans, an FHA loan in Tucson, and more. Service areas include Tucson and Green Valley, Arizona.