When you are planning to buy a home, chances are high that you will need financing to complete that purchase. Loans can help spread out payments over the course of years, making homeownership more obtainable. Learn why an FHA loan in Monroe, Louisiana and elsewhere is popular below.
What is an FHA Loan?
An FHA loan, like those you can obtain at Century Next Bank, is a type of mortgage insured by the United States Federal Housing Administration (FHA). This mortgage is provided by a lender who has been approved by the FHA. Being that the FHA backs this mortgage, it enables people who normally cannot qualify for traditional mortgages because of low income, low credit scores, or both to obtain them.
Keys to It Being Popular
One of the main keys to this type of loan being popular is because more people have access to this type of loan. As mentioned above, people with lower credit scores, lower incomes, or a combination can apply for and often be approved for this type of loan because the lender is supported by the FHA. If the applicant fails to live up to the terms of the loan, the FHA will compensate the lender.
Another reason why this type of loan is popular is because the applicant does not have to put down 20% of the home’s value as is often the case with a traditional mortgage to avoid private mortgage insurance. With a loan backed by the FHA, an applicant can put down as little as 3.5% of the purchase price with a credit score is 580 or higher.
Century Next Bank is a Member FDIC and Equal Housing Lender.
