FHA and VA Mortgages – Better Alternatives to Conventional Mortgages

TEXAS – 9 Jun, 2017 – First-time home-buyers, who find it difficult to arrange for the heavy down payment that conventional mortgage lenders ask for, can now look at options like FHA and VA mortgages. As these mortgages are guaranteed by the government, they prove to be much more cost-effective for the borrowers.

FHA Mortgages

Federal Housing Administration insures the FHA mortgages so that the lenders do not suffer losses if the borrowers happen to default on payment. Therefore, the restrictions pertaining to eligibility are lesser in case of FHA loans.

People with less-than-perfect-credit scores can easily qualify for FHA mortgages. Also, these loans are available at very attractive interest rates and flexible terms. The down payment will not be more than 3.5% unless the borrower’s credit score is below 580 (in which case he will have to pay up 10% of the value of the home as down payment). Nevertheless, the borrower will have to pay some amount every month as mortgage insurance in order to protect the interests of the lender.

The Federal Housing Administration makes it easy for the borrowers to afford FHA loans by letting the lenders, sellers or builders pay up a portion of the closing costs. These costs may relate to title expenses, credit reports or appraisal. Lenders who agree to pay up these closing costs usually charge higher rates of interest. Borrowers therefore need to shortlist a few competing lenders and compare their loan estimates before deciding on the right option.

As an agency of the Department of Housing and Urban Development, the FHA has the right to insure the FHA mortgages but not to lend them. The lenders who lend FHA loans should be approved by the Federal Housing Administration. However, the costs and the interest rates may vary from one lender to the other, although they may be approved by the FHA.

FHA borrowers will have to pay an upfront premium of 1.75% towards mortgage insurance at the time of closing. This may even be financed as a part of the FHA loan amount. Apart from this, an annual premium will be charged which will have to be paid monthly along with the mortgage payment. This will vary depending upon the loan amount, the initial LTV or loan-to-value ratio and the length of the loan.

FHA loans are not always meant for first-time home buyers. A special FHA loan product called 203(k) is available for those who want to make repairs and renovations to their homes. The most important thing about this FHA 203(k) is that the loan amount is based on the projected value of the home after the repairs instead of the current appraised value.

While it is important to make the monthly mortgage payments on time, the Federal Housing Administration provides some relief to those borrowers who are going through serious financial hardships. This relief can come in the form of a loan modification, a deferral of a portion of the loan (without interest) or a temporary time-period of forbearance.

VA Mortgages:

VA loans are available to active military members and military veterans at no down payment. Apart from these, the loans are also available to reservists, National Guard members and the spouses of military members, who may have died during active duty or due to some service-connected disability. These loans are guaranteed by the Department of Veteran Affairs and made available through private lenders.

VA loans do not include any mortgage insurance. The borrowers can hence save up a considerable amount on their monthly mortgage payments. Also, they are very easy to qualify for, as there is no requirement of minimum credit score. Nevertheless, the lenders may have their own underwriting requirements before approving VA loans. They may want to find out if the borrower has adequate income to repay the loans or if the borrower has any excessive debts. In either case the borrower can still get the VA loan provided he is ready to pay a higher rate of interest.

VA loans are available only to those borrowers who want to finance their primary homes. They can be applied for even if the borrowers have gone through a bankruptcy or a foreclosure a year or two before. There may be a requirement of a certificate of eligibility for the borrowers of VA loans. However, in most cases the lenders will obtain this certificate on the behalf of their borrowers.

Since VA mortgageis available at zero down-payment, there is a limit on the maximum amount that one can borrow. While in most parts of the country the maximum amount that can be borrowed via VA loans is $417,000, it is about $625,500 in the high-cost areas. In case the borrowers wish to pay back their VA mortgages before the scheduled date, they can do so without any prepayment penalty.

The department of veteran affairs offers another advantage to VA loan borrowers. This is especially helpful to those borrowers who have been struggling to make their monthly mortgage payments. The Department of Veteran Affairs steps in to do the negotiations with the lenders when the borrower seems unable to pay his monthly mortgage payments. They negotiate the repayment plans, come up with loan modifications and figure out alternatives to foreclosures.

The many benefits of VA loans make these types of mortgages the best in the market. However, if the borroweris not eligible to apply for a VA loan, the next option he can consider is FHA loan.

FHA approved and VA approved lenders who are looking for borrowers can contact Heritus for FHA Mortgage leads and VA Mortgage leads. These leads give them all details of the potential borrowers, who are in every way eligible to obtain these loans.

Through its dedicated team, Heritus generates FHA Mortgage Live Transfers and VA Mortgage Live Transfers that match the exact specifications of the lenders. Being exclusive and personalized these leads offer very high chances of conversions, if contacted immediately. Also, Heritus makes them available at affordable pricing, which works to the advantage of the lenders.

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