What is the difference between 30 yr fixed mortgage and 30 yr FHA mortgage loan ?
A 30 year fixed “interest rate” loan is a type of FHA (Federal Housing Administration) insured loan that as a LTV (loan to value ratio) variable that stays the same. One to stay away from is a “graduated payment loan” or an ARM (adjustable rate mortgage loan) in which the interest rate can go up or down depending on the current economic index… one month you may have 6% interest, and 3 months later it may hike up to 7%…. there is usually a cap rate index on these types of loans and usually cannot exceed 12%. An ARM these days does not make sense though since the interest rate is fairly affordable considering that the average mortgage interest rate in the early 1980’s was around 15%. The best loan out there is a fixed FHA loan and is the one that most reputable mortgage dealers will recommend to you if you are buying a house.
Really nothing. The main difference is that the FHA loan is guaranteed by the Farmers Home Administration, which allows people with somewhat worse credit to qualify for loans (the banks know they will get paid back if the borrower defaults). You also might find a slightly lower APR in the FHA loan due to this guarantee and also the down payment required is likely to be lower (FHA may only require 3% down while traditional may require more).
