FHA Loans Can Help Homeowners and Homebuyers During the Pandemic
To say that 2020’s been a tough year financially would be an understatement. The social and economic costs of the COVID-19 pandemic are unprecedented. Now, possibly more than ever, is a good time to make sure you know what home financing options are available – and how you can use them to make life easier during the pandemic.
The Current Situation
The US Federal Reserve (the Fed) said in June it expects the economy as a whole to shrink 6.5% this year. The federal funds rate, set by the central bank, is circling around record lows at just 0.25% – and the Fed doesn’t expect to raise it until 2020. So what does that mean for you, as a homeowner or homebuyer?
Home Loan Interest Rates are Low
As all other US interest rates are based upon the federal funds rate, they too are low. So if you’re a homeowner – or interested in becoming one – that’s good news for you. Now is actually a good time to buy, refinance, or even undertake home improvements.
If buying a home is something you’re considering, an FHA loan might be a good fit. These loans are insured by the government, and their qualifying requirements are less strict – which is especially helpful in the midst of a global pandemic. Even if your credit isn’t in tip-top shape, or if you don’t have a huge down payment, homeownership is still a possibility.
What About Existing Homeowners?
You might want to consider refinancing to take advantage of the current interest rate environment. And if you have some home improvements that need doing, you could consider taking out an FHA 203(k) rehab loan.
Perhaps COVID-19 ate into your renovation budget, and your home repairs still need doing. Perhaps you’ve been eyeing up a fixer-upper but haven’t had the cash to take the plunge. Or perhaps you’ve been intending to improve your place for a while – and you now get to take advantage of low interest rates. Either way, an FHA 203(k) rehab loan may be able to get you the funds you need.
How Does an FHA 203(k) Rehab Loan Work?
These rehab loans allow you to combine your mortgage and improvement costs up to $35,000 into one loan. Just like regular FHA loans, 203(k) rehab loans are government-insured and have less stringent qualifying requirements than many other loans. And remember, spending on fixing up or improving your home will likely increase the property’s value – it’s an investment.
Coronavirus has been no friend to any of us. So make sure to take full advantage of any silver lining – like lower interest rates. Despite the current economic turmoil, homeownership is still a possibility. And that includes fixer-uppers, especially if you consider FHA loans. These aim to get you the funds you need – whether they be for a straight-up purchase, a refinance, or to make improvements or repairs.
If this sounds like something that would be a good fit for you, reach out to UW Funding. As a mortgage broker, we’ll make sure you have the best-of-the-best interest rates – along with our personalized service and expertise from beginning to end.