(Mar 30, 2023)
And if that isn't an option because you don't have enough money, don't worry. One platform you can use to make owning a home in this county possible is the FHA home loan program.
Our article has everything you need to know about the FHA loan program, including its history, objectives, and eligibility criteria. We will also introduce you to all you need to enjoy the low-down payment option offered by this platform. Let's dive in.
Are you a Hometown Hero? Find out your eligibility for the Hometown Heroes Loan Program in Glades County, Florida.
A Brief History of FHA Loans
The FHA (Federal Housing Association) was created by the National Housing Act of 1934. The platform's primary objectives were to cut unemployment, increase home ownership, and run several loan insurance programs.
By insurance programs, we mean that the FHA insured loans provided by private lending institutions such as banks and mortgage programs. This aspect mainly aims at encouraging lenders to finance more prospective home buyers.
Before the FHA came into action, most prospective homeowners relied on balloon mortgages. Although these were the norm, they had more than their fair share of disadvantages. For instance, participants had to pay significantly high down payments (30-50%) and cover exorbitant amounts when their mortgages matured.
Then the FHA, part of the United States HUD (Housing and Urban Development), introduced FHA loans. The programs became famous and successful pretty fast. And they did the US a world of good by:
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Modernizing the mortgage system
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Transforming the nation's housing stock into something worth mentioning
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Financing the construction of countless modestly-priced rental units
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Preventing millions from dealing with the foreclosure nightmare
- Allowing millions to buy their first homes
Since 1934, the Federal Housing Association's loan programs have served around 44 million homeowners. And during the financial year 2020, the FHA enabled homebuyers to access 800,000+ mortgage loans, and a significant chunk of that went to first-time buyers.
Popular FHA Loans
Numerous FHA loan mortgages are available today. The must-know options include:
Basic Home Loans
As the name suggests, Basic Home Loans are the standard single-family home mortgages. This program mainly finances applicants that need help buying or refinancing their principal residences.
Like all other FHA-insured loans, Basic Home mortgages are backed by the Federal Housing Association and funded by private lenders.
Note that you can only use the FHA's home loan to buy a home with 1-4 units. If the property you plan to own isn't a one-to-four-unit structure, seeking an alternative may be necessary.
Condominium Loans
Condos are becoming more popular by the day. Many people opt for these structures because most are cheaper than single-family homes, have fewer maintenance needs, and offer access to various top-tier amenities, including pools and gyms.
Suppose you want to buy a condo unit but don't have to cover the asking price out of pocket. In that case, the FHA's condominium loan program may help you make the final leap. Generally, this platform guarantees mortgages involving one-family condominiums located within FHA-approved complexes.
Disaster Victims Loans
Did you know that, in 2021, natural disasters hit around 1 in 10 homes in the US? And American homeowners are often affected by numerous of these, ranging from tornadoes and floods to earthquakes and wildfires.
Fortunately, you don't have to shoulder the aftermath alone if you are a disaster victim. If you lose your home in a disastrous event like a tornado, you can get an FHA-backed loan and use it to repair or build anew.
Energy-Efficient Mortgages
Not every home available in the market has energy-efficient features and appliances. Some are downright deplorable, with issues like gaps and poor insulation, which lead to higher energy consumption and shooting utility bills.
But most issues surrounding a home's energy efficiency are fixable. And the good news is the FHA is ready to help you cover the costs of improvements that make your principal residence more energy-efficient, including installing solar array energy systems.
Adjustable-Rate Mortgages
As you may have already surmised, adjustable-rate mortgages are loans with interest rates that change periodically. That makes them the exact opposite of fixed-rate mortgage loans, whose interest rates remain the same throughout their lifetimes.
Why would anyone go for adjustable-rate mortgages instead of fixed-rate loans? Since their interest rates change depending on factors like the benchmark rate index, these solutions often help borrowers save thousands of dollars.
What's the FHA Low Down Payment Feature?
The FHA-insured loan program has one feature that makes them outstanding: low-down payment.
Before buying a home, most people often wrestle with one crucial question - how much to put down. Most experts would advise you to pay a 20% down payment. They consider this the sweet spot because it reduces the lending risk and, arguably, leads to lower home purchasing costs.
But, when it comes to putting down 20% on the house, most people can't swing it. There are many reasons for that issue, high costs of living, low income, and soaring property prices among the top 5.
And as much as you may want to do everything possible to hit the bar, including getting a second job and borrowing from family and friends, raising 20% can still be unattainable.
Lucky for you, if you are eligible for an FHA-insured loan, spending valuable time, money, and sometimes dignity trying to raise a 20% down payment is unnecessary.
Why? The FHA loan program instructs lenders to offer 96.5% financing to borrowers, asking them to put down as low as 3.5%! That is what the FHA's low-down-payment option is all about.
What Do You Need to Enjoy the FHA's Low Down Payment Option?
If you want to use an FHA-insured loan to buy a home without putting down anything over 3.5%, ensure you have a minimum credit score of 580. So, we hope you are already familiar with your score. If not, plenty of platforms can help you get it without charging a dime.
What if your credit report comes back with a score less than 580? If that happens and you are not pressed for time, you may use various strategies to improve it before applying for an FHA-insured loan. These include:
Disputing inaccuracies in credit reports
Your credit report may come back with several inaccuracies, such as personal information or identity errors, clerical mistakes, and inaccurate account status reports. You shouldn't ignore any of these, no matter how minor they may seem.
The best thing to do after spotting an error on your report, be it a misspelled name, old phone number, or activity you don't recognize, is to contact the credit reporting company and dispute it immediately.
Paying bills on time
Numerous bills affect your credit score. These include utility bills, rent, student loans, and credit card payments. And you guessed it, paying these bills on time improves credit while delays and defaults do the opposite.
So, if you haven't been keeping up with bills, it's about time you changed and made prompt, timely payments.
Avoiding new credit card
Americans are getting new credit cards by truckload. By February 2022, this nation had around 11.5 million new credit cards. Sadly, although getting a new credit card may seem like a good idea, it may do your score more bad than good.
If you open a new credit card and use it to make a big purchase, your score will dip. The same will happen when you apply for a balance-transfer card and try to get high credit utilization by moving higher-interest debts to the card.
To summarize, avoid opening new credit cards if you don't want to hurt your credit score.
What if You Don't Meet All Qualification Requirements?
Suppose your credit score is less than 579 or below, and you don't have the privilege of waiting until it hits or exceeds FHA's minimum for the 3.5% down payment options. What now?
Well, the good news is you can still get a loan with a credit score as low as 500. But it will come with several drawbacks that may be deal breakers. First and foremost, you can't get an FHA-insured mortgage with a low credit score without paying a 10% down payment.
Putting more money on a house isn't inherently wrong, but it doesn't do you a world of good, more so if you have tight finances. Plus, it means paying money you'd otherwise invest elsewhere.
Let's go deeper. Suppose you filed for bankruptcy at some point and want to apply for an FHA-backed loan. Can you still get it? The shortest answer is maybe.
You may qualify for an FHA-insured mortgage two years after a Chapter 7 Bankruptcy discharge. On the other hand, if you filed for Chapter 13 bankruptcy, you may apply for an FHA home loan after proving you've been making timely, verified payments for a year or more.
And if you have no credit history, FHA-guaranteed loans should still be within your grasp. The US Department of Housing and Urban Development forbids lending institutions from rejecting borrowers' loan applications because they don't have a credit history.
What Makes FHA Loans Worth It?
Besides the low down payment offer, the following make FHA-backed home loans worthwhile:
Down payment and closing cost assistance
You may have heard that some mortgage programs allow down payment assistance and wonder if FHA-insured loans come with this feature. And that is entirely acceptable and justifiable because down payment assistance programs help you satisfy down payment requirements.
Luckily, FHA-approved lenders make room for down payment assistance. You may get down payment assistance in Florida from a certified platform like the Florida Housing Finance Corporation (FL Housing).
Wait, there's more! The FHA also allows closing cost assistance. So, any eligible source can help you cover some of the fees you need to clear before finalizing your mortgage loan, including documenting processing, appraisal, escrow deposit, and origination fees.
Reasonable mortgage insurance costs
One of the solutions lenders use to lower risks, mainly when borrowers unwilling to pay a 20% down payment are concerned, involves mortgage insurance. This option protects the financing institutions from participants likely to default in the future.
Not surprisingly, some lenders' yearly mortgage insurance rates are as high as 5%. If you take out a mortgage worth $300,000, you may have to pay $15,000 in premiums. Pretty high, huh?
If you want to avoid high mortgage insurance costs, opt for the FHA-guaranteed home loan program, which charges a mere 1.75% of the base loan amount. So, the same $300,000 mortgage we mentioned before attracts roughly $5,250.
Flexible co-owner and occupant requirements
The FHA allows co-borrower who don't plan to occupy a specific property as their primary residence to use their insured mortgage to finance its acquisition. These can be spouses, parents, siblings, step-children, children, uncles and aunts, or nieces and nephews.
Here's an example that'll help you understand this concept better. Suppose one of your loved ones wants to buy a condo using an FHA-backed loan. You may be a co-borrower or co-signer without living in the unit they'll purchase. But they have to be prepared to use it as their primary residence.
Should You Use Your FHA Loan to Purchase a Home in Glades County, Florida?
If you have a family or plan to raise one soon, buying a home in Glades County may be the best move you'll ever make. That is so because this area has fantastic places you can visit with your loved ones, including:
Carnivals
Taking your family to a carnival is a foolproof way to have tons of fun and make lifelong memories. And kids love carnivals. Why wouldn't they when these places are often choke-full of the things children find enthralling, including water slides, characters like Cat in the Hat, face-painting, and balloon animals?
You can't afford to miss carnivals and what they offer in Glades County, especially on special occasions like the Chalo Nitka Festival and Frontier Days.
Restaurants
Hispanic cuisines are a favorite for many for good reasons. First, people love them because they are tasty, unique, and worth every penny. As if that is not enough, most Hispanic dishes are healthy because they are laden with all the right constituents: proteins, carbs, vitamins, etc.
If you want to enjoy mouth-watering, wholesome Hispanic dishes, Glades County has several restaurants you'll love sampling with your loved ones. These include La Isla Flavor Café and Taqueria San Juan.
Parks
Spending a sunny day on picnics with your family in a quiet, peaceful park is healthy and jolly fun. You kids enjoy the fresh outdoor air and play around while you and your spouse lounge on the grass, watching joyfully and reconnecting.
The good news is moving to Glades County will get you closer to more parks than you'll know what to do with. You can start by visiting popular spots like Ortona Indian Mound Park, Buckhead Community Center, and Curry Island.
Riding arenas
Horseback riding has many outstanding benefits. Many people today use this activity to build stronger muscles, improve balance and coordination, bolster heart health, and hone reflexes, and the outcomes are often stunning, to say the list.
Glades County is home to numerous world-class riding spots. And the best thing is, if you are yet to become a skillful riding expert, you can first train and hone your skills in reputable places like Tracey Norton Riding Academy, Patricia Klees, and Orange Clover Farms Equestrian Center LLC.
When All is Said and Done
Glades County, Florida, has much to offer and then some. You can buy a home in this region, raise a family here, and enjoy everything it offers, from state-of-the-art parks and recreational facilities to riding arenas and good restaurants.
And don't let the property prices in Glades County, Florida scare you. If your financial situation is more than ideal, and you can't to even put money down on a home, let alone purchase it in one go, FHA-approved lenders may help you cover all relevant costs.
Before applying for an FHA-backed mortgage, check your eligibility based on everything we've listed above. If you meet all requirements, don't wait any longer; apply today. Good luck.
(Mar 30, 2023)
