Ephraim, WI
FHA Loans
FHA Loan Company in Ephraim
It is no secret that it is harder to step up on the property ladder. This is in no small part due to individuals paying exorbitant rents, which allow them no room to save for a down payment on a home. Thankfully, it is no longer necessary to find a 20% down payment. There are options that make buying a home much easier.
FHA (Federal Housing Administration) loans are perfect for those who can easily afford a mortgage but cannot manage the 20% down payment. FHA home loans make homeownership in Ephraim, WI more accessible to lower and middle-income individuals and families. However, they do not work for everyone. Contact a representative at Compass Mortgage in Ephraim to find out what an FHA loan can do for you, and if you can qualify.
How Does an FHA Loan in Ephraim Work?
An FHA home loan is insured by the FHA, though they are provided by an approved mortgage lender.
There are two key advantages to an FHA home loan in Ephraim:
- The down payment can be as small as 3.5%
- Lower than average credit scores are accepted
The average credit score is 620, which is typically what traditional lenders will require you to have in order to take out a mortgage. On the other hand, an FHA loan will accept people with scores as low as 500; however, the lower the score, the higher the down payment required.Ephraim
For example, a score between 500 and 579 can still be accepted, but the down payment requirement will be at least 10%. A score of 580 and above can qualify for a down payment of as little as 3.5%.
FHA mortgage loans are always provided by an approved FHA lender such as Compass Mortgage in Ephraim. The key difference is that the loan must be guaranteed by the FHA.
That means you are required to pay monthly premiums to the FHA for their mortgage insurance. They will then pay any claim if you happen to default on the loan.
Available Types of FHA Loans in Ephraim
Ephraim FHA loan lenders can offer a few different types of FHA loans. Depending on your needs and the type of property you wish to purchase, one of these options will be the best fit for you:
- Traditional Mortgage: The most straightforward choice. A loan to finance your primary residence.
- Home Equity Conversion Mortgage: A reverse mortgage program assisting those ages 62+ convert the equity in their property but allowing them to retain the title on their property.
- FHA 203(k) Improvement Loan: A mortgage specially designed to incorporate the cost of not only buying a property but also any costs you need to carry out renovations and home improvements. Ideal for the purchase of older homes that need work.
- Section 245(a): This is for anyone who expects their income to increase over the coming years. This type of mortgage begins with lower monthly repayments and increases over time. The result is a shorter loan term.
- FHA Energy Efficient Mortgage: Similar to the FHA201(k), this type of mortgage incorporates the cost of converting the home to more energy-efficient systems resulting in lower utility bills.
Is an FHA Loan for Everyone?
The biggest requirement for anyone looking to take out an FHA loan is that it must be used for the purchase of your primary residence. Once the sale has been completed, you are required to move into your new home within 60 days. You are then required to live in it for at least a year before you can move out.
This means the FHA loan is not ideal for anyone looking to purchase second homes, vacation homes, or property as an investment.
The only exception is those who want to receive a rental income from their property. There are two ways to do this:
- Live in the property for the required year before moving out and renting the property.
- You are allowed to purchase a multifamily residence, providing you live in one of the units. The rest can be rented out as you wish.
Applying for an FHA Loan in Ephraim
Compass Mortgage is your approved Ephraim, WI FHA loan provider. Our team specialize in mortgages and have expert advice for you.
The process of application involves several steps:
- Pre-approval: Complete an application to determine if you are eligible for an FHA loan.
- Committed: Provide additional documents so you can be provided with an exact loan amount we are prepared to give you. This approval can be taken to sellers and is a better-than-cash offer that will help your acceptance.
- Down Payment: Time to make the down payment at the percentage determined by your credit score.
- Appraisal: This step determines the value of the property
- Closing Costs: The final step is the payment of any fees or deposits associated with your purchase.
Contact Compass Mortgage in Ephraim today, and we will happily assist you in finding the perfect mortgage for your perfect home.