In modular home financing, home buyers are presented with a number of options. Among those financing options are the VA Loan and the FHA Loan. But which is better? Which among the FHA Loan and VA Loan is right for your modular home financing?
VA loans are similar to FHA loans in that the Department of Veterans Affairs isn’t the group which makes the actual modular home loan. Rather, the VA insures the loan — or, rather, a portion of the loan, to be exact.
The VA’s loan insurance is known as the VA guaranty, and it gives U.S. lenders the confidence required to make 100% LTV mortgages to qualified VA borrowers.
Veterans can use their hard-earned home loan benefits to purchase condos, single-family residences, and even multi-unit properties so long as they plan to live in the home as their primary residence.
Military borrowers wanting to use the VA loan program for anything other than a primary residence will find lenders unwilling to make such loans. The lone exception is for the refinance of a home which was previously owner-occupied, but which is now a rental home.
The VA will allow homeowners who once lived in a home which is currently a rental to refinance using the VA Streamline Refinance.
The Federal Housing Administration (FHA), provides mortgage insurance on modular home loans made by FHA-approved lenders. FHA insures these loans on single family and multi-family homes in the United States and its territories.
FHA insured loans require mortgage insurance to protect lenders against losses that result from defaults on home mortgages. FHA lending limits vary based on a variety of housing types and the state and county in which the property is located.
Before you start the loan process, you’ll want to be prepared for the loan application. Have your information organized and ready for your loan officer. Be prepared to pay for property appraisal and a credit report. While FHA defines which closing costs are allowable as charges to the borrower, the specific costs and amounts that are deemed reasonable and customary are determined by each local FHA office.
Today the mission of the FHA includes helping borrowers get amounts they qualify for, and assisting lenders by reducing their risk in issuing loans.