February 2, 2011
When you want to get an FHA loan–especially for that first home purchase–there are a lot of options to choose from. How does a buyer know which FHA loan product to choose? There are many ways to answer that question, but it all depends on the buyer, what his or her goals are, and how important certain kinds of savings are to the future home owner.
FHA loans come in many different varieties. There are fixed-rate mortgages, variable rate loans, FHA mortgages on a 15-year term and FHA mortgage loans with 30 year terms. Add down payment amounts to those choices and the borrower is sometimes left wondering if there’s a clear direction to go in–but fortunately there are online loan calculators and other tools that can help a buyer pick the right loan.
FHA loans cost the buyer more or less money depending on the choices made starting with the type of interest rate–fixed or adjustable. The online comparison calculator at FreddieMac.com can help you see how much each type of loan would cost (a rough estimate) over the lifetime of the loan.
At the same website there is also a tool to help buyers understand how much 15-year loan terms would cost vs. 30-year mortgages. Interested in seeing how much money you could save by paying points up front to lower your interest rate? There’s an online calculator tool for this on the same page. You can even learn how much you’ll save over the lifetime of the loan by paying more than the minimum FHA mortgage payment each month.
These online calculators are estimates and can’t be taken as a guarantee of what you will pay–but they are excellent tools for becoming a better informed and more empowered FHA loan applicant.
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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