Written by - February 04, 2023
Bold Header: IntroductionFHA loans have become a popular financing option for those seeking to own their first home. FHA loans not only require a lower down payment but can also help those with lower credit scores qualify for a mortgage. But many people often wonder what the difference is between "insured" and "guaranteed". In this article, I will discuss exactly what those terms mean and how they relate to FHA loans.
Bold Header: InsuredFHA loans are insured by the Federal Housing Administration (FHA). This means that if a borrower defaults on their loan, the FHA will reimburse the lender. The FHA will then take over the ownership of the property to sell it off to cover the loss. FHA insurance is designed to protect the lender, not the borrower.
Bold Header: GuaranteedFHA loans are not guaranteed by the government. Instead, they are backed by the government, which means that the government will pay the lender a portion of the loan if the borrower defaults. This guarantee is the reason why lenders are willing to offer FHA loans to those with lower credit scores or smaller down payments.
Bold Header: DifferencesThe main difference between "insured" and "guaranteed" is who is being protected. FHA insurance is meant to protect the lender while the guarantee is designed to protect the borrower. If a borrower defaults, the lender is protected by the insurance. However, if the government fails to pay the guaranteed portion of the loan, the borrower will be responsible for repaying that portion.
Bold Header: Benefits of FHA loansFHA loans have many benefits that make them attractive to borrowers. Some of those benefits include:
Bold Header: Mortgage Brokers Pro Mortgage Brokers Pro has been helping people find the right mortgage for their needs for years. They specialize in FHA loans and can help you navigate the application process. If you are interested in learning more about FHA loans or want to see if you qualify, contact Mortgage Brokers Pro for more information.
Bold Header: ConclusionIn conclusion, FHA loans are insured by the Federal Housing Administration and are backed by the government. This means that both the lender and the borrower are protected in the event of a default. FHA loans offer many benefits to borrowers, such as lower down payments and credit score requirements. If you're interested in an FHA loan, contact Mortgage Brokers Pro for more information.