7 Pros and Cons of the FHA Loan Refinance

The FHA – The federal Housing Government- which was founded in 1934 has helped families ever since to make loans affordable and easier to pay. This helped many families who in the past had bad credit and had to pay more for loans. The FHA is very highly regarded for that reason. Now keep on mind that there are many pros and cons of this facility as well.

Here are 7 Pros of the FHA Loan:

• You only have to put down 3% as the down payment rate whereas many other loan lenders require much higher percentages of down payments. Some other loans do require no down payments but they require great credit and large income. So this is a great facility for the people with average or below average incomes and credit scores.
• You can borrow the entire down payment or receive it as a gift
• A third party or even the seller is allowed to help pay the closing costs
• Normal loans require reserve payments of two months called principal interest taxes insurance and there is no such requirement at closing for the FHA Loan.
• Lower loan rates than other fixed interest rates
• They are just simply assumable, this started from December 1st 1986. No you don’t need to formally qualify
• No pre-payment penalty
• Can have a second mortgage at the same time as this one

They are not all the way safe or fruity. They also have some cons as well.

Here are 7 cons of the FHA Loans:
• Cannot be assumed after normal qualifying
• The buyers and sellers may have to pay discount pints or closing costs or anything related to the rules and conditions of the FHA loans.
• The seller must also pay heavy costs
• MIP( Mortgage insurance premium) must be paid
• An annual renewal premium is also charged and can be include in the monthly payment
• Usually a one percent fee is usually
• Appraisal may be harder than the normal loans
• Processing times also may be longer because many people apply and there is a lot of government paperwork involved.

Once you weigh out the pros and cons, go ahead and decide if the FHA loan Refinance is something you would like to apply for. It has many restrictions and it harder but can have lots of long term benefits. Good Luck!