The Federal Housing Administration is committed to helping people with bad credit realize their dream of owning a home. The organization offers a guarantee, which lets such borrowers with poor credit qualify for loans.
Owning a home comes with a considerable amount of pride. You get to own the roof over your family’s head while building your net worth instead of helping your landlord building their wealth. After taking out a mortgage, each monthly payment goes towards building equity in the home.
Qualifying for an FHA loan in Orem, Utah sets you on the right path even when your finances aren’t in the best shape. Since the federal government guarantees these home loans, lenders are only too willing to indulge anyone who makes the cut.
A solution for people with bad credit
The high cost of living, low wages, and poor money management skills often leave people in bad shape financially. As a result, most people tend to rack up huge credit card debts, which only makes matters worse. Such people often have a low credit score and a terrible credit history.
However, the follies of your youthful years shouldn’t stand in the way of becoming a homeowner. You will need a credit score of at least 700, steady income, a good history, and a sizeable income to get a typical home loan. The government-backed loans are a tad more forgiving with terms of engagement. You will secure a mortgage with a credit score that is as low as 580, but most lenders set the cut-off line at between 620-640.
You can secure an FHA loan if you have little or no credit history, as long as your credit history is clean. Don’t worry if your credit record is wanting as you only need a clean record for only one year to qualify for an FHA loan. If coming for bankruptcy, you need to clear your records within two years and three years after a foreclosure.
An all-welcoming facility
Most self-employed people have to jump through lots of hurdles when trying to secure a conventional home loan. Inconsistencies in monthly income get lenders all skittish, disqualifying many of the borrowers. Luckily, the federal government back loans are more forgiving to these set of borrowers.
You only need to avail two years’ worth of tax returns, a current bank statement, and a profit and loss statement for you to qualify for an FHA loan. Stable employment history for the previous two years can help boost your loan application. You, however, need to be working in the same field to qualify for a loan.
Better interest rates
FHA loans come with the same interest rate for all its clients regardless of your credit ratings. This is unlike conventional loans where each customer has an interest rate pegged to their credit history. A credible credit history calls for a lower interest rate, while a poor credit rating ensures you pay a higher interest rate. FHA loans have no interest penalties if your scores are on the lower side. Each applicant that qualifies for a loan gets the current interest rate.
The relaxed requirements on FHA loans make it possible for people with low credit score and poor credit score to realize their dream of owning a home. Since the federal government guarantees these home loans, lenders are only too willing to work with the people who wouldn’t otherwise qualify for a standard mortgage loan.