Make Your Home Purchase Even More Affordable

Home affordability has never been better.  The combination of low home prices and mortgage interest rates has created the prefect time to buy.  Such a combination has also created exciting loan options that provide both buying power and safety for the home buyer.   

When financing a new home purchase most buyers consider a fixed rate mortgage.  While the fixed rate is a great option there are safe alternatives to make your home purchase even more affordable.  Take for example the FHA (Federal Housing Authority) loan program, which is known for having a low down payment and liberal qualifying guidelines.  The FHA loan program is now offering an adjustable rate mortgage specifically designed with borrower safety in mind.

The FHA adjustable loan is vastly different than the adjustable mortgages that spurred the sub-prime crises two years ago.  The FHA program offers a fixed payment for the first 5 years (The rate is currently running about 1.5% below the current fixed rate of 5.35%).  After the initial 5 years, the payment is capped and cannot change from one year to the next by more than 1%.  Therefore, a borrower will have the comfort of knowing that the payment cannot be higher than the comparable fixed rate mortgage for at least six years!  The caps are there to provide protection to the home buyer.

Finally, the FHA adjustable loan provides buying power.  Due to the lower interest rate, a new home buyer can afford as much as $55,000 more home for the same payment they would have had on a fixed rate mortgage.

Remember that not all adjustable rate mortgages are alike.  Some are better than others.  To learn more about FHA adjustable rate mortgage, it is recommended that you speak to a loan officer who is experienced with this type of product.  You can also see how the program will affect your loan situation by using a payment calculator.  

 Authored by, Jeff Sickeler, Sales Manager for WFS Mortgage, LLC an Affiliate of Wells Fargo Home Mortgage