New Jersey FHA Loan Facts

Advantages of Federal Housing Administration (FHA) Loans NJ

A home/mortgage loan that gets insured by the Federal Housing Administration is what is aptly referred to as an FHA loan. These kinds of loans are available to individuals who want to own a home but have no enough financial power to do so. FHA-approved lenders are the ones legally authorized to issue out FHA home loans to borrowers. And in order to reduce their risk of loss in case a borrower defaults on the payments, the federal government insurers the FHA loans.

That is why FHA loans in NJ are attractive to prospective homeowners living in the small of New Jersey. These loans, for the record, are a part of Housing and Urban Development (HUD). Before you can get approved as a borrower, you must initially meet certain guidelines: you have to meet all the requirements of FHA loans and those of the FHA-approved mortgage lenders. So, it is palpable that not everyone though is eligible to apply for the FHA loans in New Jersey.

Look at the Growth of FHA loans since the Recession.

FHA Loan Growth

Considerable benefits of FHA loans in New Jersey

To begin with, as a borrower, you have the advantage of a smaller down payment compared to a conventional mortgage loan. FHA mortgage loan lenders are willing to allow borrowers to pay a meager down payment of as low as three-percent. With a conventional home loan, you have to put down at least ten-percent to five-percent of the purchase price. So this is a clear picture of why FHA loans are popular and highly attractive in New Jersey.

New Jersey FHA Loans are especially attractive to first-time buyers who need to own a home but have no larger down payments to part with. FHA loans are designed to reduce down payment expenses of those with limited buying power. The FHA program was actually put up, in the 1930s, after a rash of foreclosures and defaults. Since then, they have been very popular especially with first-time buyers as they stimulate the housing market by making loans accessible and affordable.

In addition, FHA loans have easier approval than conventional mortgage loans. An FHA loan does get approved quite easily as it gets insured by the federal government, which is a guarantee that the loan will get paid in case a borrower defaults. FHA mortgage lenders will be quick, thus, to approve the FHA loan. With conventional mortgage loans, the insurance comes from private insurance companies who are fairly strict on whom they give out the mortgage loans to, and why.

If you apply for a NJ FHA loan, you have more flexible guidelines for credit scores as well. While an insurance company might require a very high credit score for an approval of a conventional home loan, a borrower of an FHA mortgage loan can get approved even with a credit score below seven hundred points. It is quite amazing if you think about it. Insurance company lenders cannot approve a loan with such a lower score. It is actually detrimental to business like it happened in 2011 in the U.S.

 Additional FHA Home Loans Benefits

FHA loans equally have a higher allowance for debt-to-income (DTI) ratio, which is a comparison between the amount you pay toward your debts, and the money you earn each month. Most lenders will review your DTI before approving your conventional mortgage loan. A higher DTI will definitely ruin your chances, but not when seeking an FHA loan in New Jersey. It is possible to get approved for an FHA loan even with a DTI higher than fifty-percent.

It is quite risky to acquire a conventional mortgage loan with such a higher amount of debt, but the same cannot be said of an FHA program. FHA-mortgage loan lenders are also very willing to approve a home loan with such a ratio percentage of DTI. Even with a DTI percentage of fifty-eight, a borrower can get their FHA loan approved by an authorized FHA loan lender. That explains their attractiveness. For conventional home loans, DTI is capped at forty-five percent.

Lastly, FHA loans in areas like NJ are more lenient towards borrowers with a bankruptcy or a foreclosure record, making it easier for them to apply for FHA loans. But it is not possible for an individual with a bankruptcy or foreclosure record to qualify for a conventional mortgage loan.

Annie Moody

Buying and Selling New Jersey Shore Real Estate

NJ Coastline PropertiesThe Jersey Shore has been one of the best vacation spots for generations as it offers some of the best food, real estate, attractions and coastal water.

Due to its popularity, many people have invested money into the real estate around the Jersey shore and surrounding areas.

However, with real estate, you want to be sure that you are going the most bang for the buck. This is why it is recommended you have certain elements in order before investing.

Let’s look at some factors to think about when skimming property at the jersey shore.

Get A Real Estate Agent

The best thing with real estate agents is that they specialize in certain areas and know the market inside out. This means you’ll be able to find exactly what you are looking for when searching for real estate.

Another thing to do is find the right agent by reading reviews online. You can go online or even ask people who have purchased homes in the area. Sit down with potential agents until you are comfortable with the person.

Finances in Order

No matter what you need to ensure you have your credit and finances in order. Real estate does cost money and you most likely will need a mortgage to get started. This means having the right credit and percentage to put down.

We recommend contacting the right people like banks and agent to find out exactly what you need in terms of investment and credit score. Having this information will ensure you don’t get caught off guard when it comes time to sign the papers and put down the money.

Education Matters

Whenever you are about to invest money it’s important you educate yourself about the surrounding area. This will give you a better idea of how well the aftermarket it in the area. No matter what people say your always looking for a good return on your real estate.

This means investing at the right time and making sure you’ll get the right money back when ready to sell. Educating yourself about the market and how well previous homes have performed will help you make your decision going forward.

In the end, your goal should be to find a property which your happy with and can invest money into without a bad return in the future.