Moving on in our series, one of the most popular and most recognizable is the FHA mortgage. This type of loan is obtained from a regular institutional lender, such as a bank or credit union. The lender is insured against loss on the loan by the Federal Housing Administration (FHA). An (FHA) loan can be a fixed-rate mortgage or an adjustable rate mortgage.
Advantages: If you have sufficient income to make mortgage payments, you can get an FHA loan for anywhere from 95%-97% of a homes cost. And, with a fixed-rate FHA loan, your home may be–
- Much easier to sell at a big profit: FHA loans are assumable. So, if interest rates are way above your mortgage interest rate when you sell your home, any buyer who assumes your loan, automatically gets a big bargain. As a result, you can charge a premium price for your home
Disadvantages: You pay premium for the FHA mortgage insurance. Also, it takes just a little bit longer to get an FHA loan than it does a conventional loan.