Advantages and Disadvantages of FHA Mortgage

1. Advantages and Disadvantages of FHA Mortgage FHA loan is a mortgage insured by the FHA and backed by the government or Federal Housing Administration. For the mortgage insurance, the borrowers of FHA pay and in that way the lender gets protection from any kind of loss if in any way any fault takes place. Here are some more advantages of FHA mortgage Texas which you can consider:-  Rates of FHA mortgage:-The rates of the FHA mortgage Austin is significantly lower than the other common mortgage rates on the confirmation of a loan. To cover the closing costs of the buyers, the sellers are allowed to pay up to 6% of the entire amount of the loan. For so many homebuyers, it is greatly beneficial.  Assumable:-Another great benefit of FHA mortgage Houston over the conventional ones that the FHA loans are quietly assumable. When it is about selling, the existing FHA loans of the sellers can be taken over by the buyers and there is no need of taking out any new mortgages no matter what is the mortgage rate at that very time. This is extremely beneficial in an environment of rising rate. Now like everything, FHA mortgage has its own share of disadvantages:-  Premiums:-The most important downside to consider about FHA mortgage Dallas is those costs which are linked with the insurance premiums of the annual and upfront mortgage. The cost can be paid out-of-pocket but in most of the cases, it is added to the loan’s principal balance. So the loan amount increases a lot. There are also mortgage insurance premiums which you need to consider. Whereas in the case of Private Mortgage Insurance, there is a wide range of costs as per the credit score and the down payment of the borrower, the insurance premiums of the FHA mortgage goes only by down payment.  Cost: -In case of the conventional mortgage loans, if you are able with a minimum 20% down payment, you will not need to pay for the insurance of the private mortgage. Even the borrowers can plea for a drop of the [private mortgage insurance if the balance of their mortgage falls to 80% of the entire value of their property. But, for FHA mortgage, no matter what is the equity amount accrued, the payments of the mortgage insurance has to be done each year for the whole life span of the loan. But if down payment and solid score appear to be the stretch for the borrower, the only option left for him is FHA loan. So, considering both the advantages and disadvantages of the FHA mortgage, go ahead for it considering your requirements and circumstances.