Buying your own home is one dream which many of us love to see and accordingly we plan separately for home buying. Many of us depend on FHA financing as this has become one of the convenient ways of buying a home in the US. Though there are lots of pros and cons of this FHA financing which we need to take care to stay safe. Let us have a look at the advantages of FHA financing.
The percentage of down payment is low: Once you opt for FHA financing, you will find that here you will require paying lesser upfront money than usual financing loans. Here one needs to pay only 3.5 % as down payment whereas in other traditional financing options you have to pay at least 5 percent down payments. Hence, it is well understood that buyers preferring to go for FHA financing can buy a home by investing low upfront money.
Flexible Credit history: Key benefit to notice is that FHA follows many liberal policies for every home buyer. This financing has an additional flexibility in terms of credit history than other conventional financings. In general, you may have noticed that for availing traditional finance options, issues relating to late payments or collections are handled very strictly and is not at all liberal like FHA financing.
Giving the power to buy a costlier home: Once you take the decision to go with FHA financing you will definitely understand the difference between FHA financing and another conventional financing. In FHA financing, you will able to buy costlier homes whereas in conventional financing you will not be able to avail this opportunity. In conventional financing, buyers with strong credit will get the facility.
Apart from those above advantages, you can also notice some disadvantages of FHA financing. Let us take a look at the disadvantages of FHA financing as well.
Huge Paperwork – The home buyers need to face huge numbers of paperwork if they like to take the advantage of FHA financing. However, this is a minor limitation of this financing, still all home buyers need to be aware of it.
Superior standards of Property – In conventional financing, we can have all types of properties. But, in the case of FHA financing, more priority is given safety and security measures of every property. So, naturally we can have a property with above average standards, better to say superior standard.
Mortgage cost is high – In FHA financing we need to pay nearly 1.75 % mortgage cost and this is a bit higher than other conventional mortgage costs. The charge is high as FHA financing is much liberal than the other methods of financing.
Hence, after having a complete knowledge of all the benefits and limitations of both FHA as well as conventional financing, every home buyer should take necessary decisions as which one will fit well for them. No doubt in the fact that it is one of the strongest options to consider while planning for home buying.
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