Tennessee FHA Loan Basics

If you are trying to lower your mortgage rate and payment, a Tennessee FHA may be the answer. Tennessee FHA loans can help you purchase property, make home renovations and utilize your equity as you see fit.  In some instances, you can even make energy efficient improvements to your home with an FHA home loan.

Benefits of Tennessee FHA Loans

Tennessee FHA home loans are easier to qualify for than traditional home loans.  This is because the FHA does not loan you the money directly.  Instead, once you qualify, a lender will fund the FHA loan and guarantee it. This means that if you're unable to meet your mortgage payment and default on the mortgage, the lender will still get their money.  A Tennessee FHA loan will guarantee a certain percentage on the loan to be paid if foreclosure should occur.

Tennessee FHA Credit Requirements

Contrary to popular belief, a perfect credit score is not necessary in order to refinance with a Tennessee FHA loan.  While there are certain standards that you need to meet in order to get a loan guarantee, they are not as stringent as with traditional loans, because there is a guarantee to the lender.  Thus, it is easier for you to get approved for FHA mortgages.

FHA loans are the preferred method in instances where very little can be made for the down payment or in some cases when no down payment can be made at all.  Even though traditional lenders usually require 20% of the loan as a down payment, standard Tennessee FHA loans usually only require 3%.

More importantly, FHA loans allow you to receive the 3% as a gift.  For instance, you may be able to borrow it from a friend or relative, or even use a down payment gift program. 

In the instances where you are refinancing your loans, you'd be able to refinance sooner or take out equity from your home. These funds can be use to consolidate debt, pay college tuition or for any other needs that arise.

Additionally, there are instances where Tennessee FHA loans will allow you to refinance your mortgage in a way that lowers the amount of interest you are paying.  This is because you are in a position to negotiate better loan terms because of the guarantee on the loan.  Since risk is lowered, lower rates can be offered.

In traditional mortgages, a lender will not stand by you if an emergency occurs.  With an FHA home loan things are different.  They will help you get out of trouble and are more flexible if you are on the verge of defaulting on your loan.  They have specific programs in place to help you in times of crisis.

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