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The Facts About FHA and VA Home Loans & Refinancing

For those who qualify, a mortgage from the Federal Housing Administration (FHA) or from the Department of Veteran’s Affairs (VA), is an attractive option for buying a house. Both options are quite competitive with mortgages from their private or local counterparts. The minimum pre-requisites for obtaining a mortgage from either group are usually much favorable and the mortgage itself is more stable and manageable. However, in the event that one is qualified for both mortgage options, there are many reasons why the loan from the VA trumps the one from the FHA.

In order to qualify for a FHA mortgage, the borrower must meet the minimum requirements in credit score (500), verifiable income and employment, and be a legal resident of the United States.

Contrary to popular belief, this program is available to repeat buyers in addition to first-time buyers. It is also available to refinance any existing mortgage and there is no maximum income limit to obtaining the loan. The attractive aspect of the FHA mortgage is the option for low or no down payment at the time of purchase. While most regular mortgages require sometimes a 20% down payment, the FHA mortgage option only requires a 3.5% payment.Get refinance here!

However, the mortgage loan does not come from the FHA. It still comes from a regular lender but is insured by the FHA, thus allowing for lower rates and better prospects. In addition, the FHA option does allot for low or even no credit scores. Lastly, it is very possible to re-apply for FHA loans if turned down initially. The FHA is a very flexible program with a variety of options to make home owning easier for the typical American.

For those who have honorable served in the United States military and qualify for the VA loans, it is another viable option for homeownership. The key aspect to a VA mortgage is the option to put no down payment at the time of payment. This is very significant for veterans who struggled to save up for a down payment but still want to buy a home. Similar to the FHA mortgage option, the VA mortgage is not a loan from the VA but actually a government guarantee to the actual lenders.

Credit requirements are also much lower under the VA option. Another financial advantage to the VA option is the no private mortgage insurance policy. Typically, borrowers need to pay monthly insurance payments until they have enough equity. However, the VA option does not require this. In terms of security, the VA mortgages have the lowest foreclosure rate despite most of the properties having no down payment.get more info from http://www.smh.com.au/business/banking-and-finance/more-customers-refinance-debt-at-cheaper-interest-rates-20160331-gnvpkc.html

In the event that both the FHA and VA mortgage options are available to a borrower, studies have pointed to the VA option coming out on top. Keep in mind that neither the FHA nor VA is mortgage brokers. They are guarantees from the government to regular lenders. Simply by crunching the numbers, a buyer will say much more money under the VA’s benefits than the FHA’s. Keep in mind that the VA loan requires zero down payments and no annual premium. A buyer through the VA will save roughly $10,000 in annual insurance fees and that is a substantial amount of money.

Home Loans & Refinancing

For the most qualified borrowers, the VA loans also offer greater options for financing as well. However, it is important to keep in mind that neither option are restricted to first-time buyers so it is quite possible to use entitlements for both for different properties. The location and timing of purchase may also dictate which option is a better option. Hopefully, this comparison provides greater insight to two attractive home buying programs offered through the government.