Question

FHA Loans are a popular product in today's lending environment. What are some advantages and disadvantages that you would share?

Answer 1

Federal housing administered loans are those loans who are backed by the government and those are provided to various United States borrowers.

Advantages of Federal housing administered loans are as follows-

A. It is relatively easy to qualify for Federal housing administered loans which are backed by borrower's primary residence only

B. Credit rating which is required for Federal housing administered loans are also lower than conventional loans.

C. if you sell the property, the buyer is going to assume the mortgage, so this is the best advantage related to Federal housing administered loan.

D.there is a lower interest rate requirement on the federal housing administered loans than the conventional loans

E.there is also lower down payment requirement on the federal housing administered loans than the conventional loans

Disadvantages of Federal housing administered loans are as follows-

A. Their needs to be a mortgage insurance upfront to avail a Federal housing administered loan

B. Monthly mortgage insurance will be payable with the life of the loan so this could be expensive on the part of the borrower.

C . There are fewer loan choices which are available to the borrowers

D. inspection standards are also high in relation to a federal housing administered loan.