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FHA Loans – Shelter Your Present and Secure Your Future

Federal Housing Administration is a government agency of the United States, which has been set up to help commoners with finances if they desire to build a house or buy it. Each and every individual has a desire to buy his dream house. But very few of them are found to fulfill their dream. The main reason behind this is the increasing cost of the property, either it is a land where one yearns to build his house or it’s an apartment. FHA loans, in this respect, are fruitful alternatives for the individuals. With the help of FHA loans, an individual can easily obtain a significant finance and buy his dream house. But before they apply for these schemes, they must go through all the relevant terms and conditions specified in the agreement.

When an individual makes an investment, he always tries to get the most out of it. Buying a house involves quite a huge investment. Thus, you must try to avail the benefits to the utmost level. Most of the people prefer living in a rented house over engaging themselves in such a big deal. But one thing that they must be aware of is that obtaining FHA loans does not only provide you a roof to live under protected conditions, but secure your future as well. These FHA finances, however, are mainly for the first time home buyers. Once you have taken FHA loans and bought your dream house, you can make sure that you have safeguarded your present and future both.

You might be wondering, how your future gets safeguarded when you buy a house. Purchasing an asset provides you a lifetime ownership. It is not limited to any specific period unless you yourself sell or leave your property. You are free to live within your house forever. Now, the icing on the cake is that obtaining FHA loans enable you to purchase a house, which you can use at your advanced stage of retirement as an ore to extract minerals which, in this case, is the equity that you release in lieu of your possession. Along with the finances for buying a house, the FHA also offers the reverse mortgage schemes. This is the post-retirement financial solution that helps the senior citizens lead an independent life at the advanced stage of their life.

The pension amount which the retirees receive after getting released from their work is so trivial that they have to look for some other means of earning. Reverse mortgage is a plan that gives the pensioners a valid way of making an income every month in return to the property that they mortgage. The amount that they receive is in addition to their pension, which is completely free of all kinds of taxes. Having a minimum eligible age with an ownership of a well-maintained asset will entitle you to enroll for these reverse mortgage schemes and avail its innumerable old age benefits.

Obtaining FHA loans and investing them to buy your dream house at the initial stage, therefore, would be a smart decision, which you may not realize when you are young, but would surely do when you get old.

Interest only Home Loans: Are They for You?

1. You are a First Time Buyer and cannot Qualify. For the first few years of purchasing a home, most of the mortgage you pay goes towards interest, not principal. With the interest only payment option, the lower payments are more manageable and you can use the money you save to pay off other debts or make investments.

2. Cannot find anything in your price range: An interest only loan can increase your purchasing power.

3. If you are retired or living on a fixed income the interest only home loan can provide extra cash flow for your living needs.

3. If you are a ‘flipper’ and buy or live in an area where home prices are appreciating quickly, it may make sense to get a 1-10 year interest only loan and invest the money elswhere.
The interest only option may increase your interest rate slightly or you may pay a fee of .125% of the loan amount and keep the lower interest rate.

Here is how the difference on the monthly payments with an interest only home loan would look:

Loan amount $180,000/30 Year Fixed Home Loan/ Interest Rate of 7%

Principal and Interest Payment: $1197.54

Interest Only Payment: $1050

Difference of: $147.54

If you were to take that monthly savings and invest it at an annual return of only 8%. By the end of 10 years you would have accumulated a $27,319 investment.

At the same time had you been paying principal and interest you would have only shaved $6,526.19 off the principal. That’s right, you still owe $173,473.81 on your $180,000 mortgage even after 10 years of paying on it.

No wonder more and more people are choosing the interest only home loans.

Here are a few more things to keep in mind about this type of loan.

The interest only option is typically only applied to the first 5 to 10 years of the mortgage term after which the loan has a pay back schedule one third shorter. After year ten the loan is fully amortized for the remaining 20 years. You payment can and will jump significantly.

At this point you can continue paying the higher payment or you could refinance. In fact you could do an Interest Only Refinance if you choose. Keep in mind by the end of ten years your income should have increased significantly and you should be able to make the payments on the increased amount. Or you can sell the home to pick up the profit.

The interest only mortgage is not limited to a 30 year fixed loan. There are many options to choose from: eg. an Interest Only ARM, Interest Only Jumbo Loan Or an Interest Only Home Equity Loan.