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Pros and Cons of FHA Mortgage Loans

02.20.2014

FHA mortgage loans are more expensive than they were in 2013. However, they are assumable, so when a property is sold, the buyer can take the reins of the seller’s FHA loan, not the current mortgage rate. Since experts think mortgage rates are going to increase in 2014, this could be a good bet. However, "Not everyone can qualify for a conventional loan, so comparing [conforming loans] to FHA loans across the board may not yield the best picture of what loan product is best," said Carla Blair-Gamblian, a home loan consultant for Veterans United Home Loans. Some pros of FHA are: FHA has a lower credit score requirement than conventional loans and smaller mortgage rates than conforming loans. A con of FHA is the cost of mortgage insurance premiums. In addition, unlike conventional loans, every FHA loan is tied to mortgage insurance for the entirety of the loan. According to Tim Pascarella, assistant vice president of Ross Mortgage Corporation, “The only negative of an FHA loan is its cost. But if a solid credit score and down payment are a stretch for you, an FHA loan might be your only option,” he said.

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