Pall Spera Company Realtors-Stowe, VT
Pall Spera Company Realtors-Stowe, VT
Teresa Merelman, Broker, Pall Spera Company Realtors-Stowe, VTPhone: (802) 793-5171
Email: [email protected]

What is an FHA loan & how does it work?

by Teresa Merelman, Broker 06/12/2024

What is an FHA loan & how does it work featured image

If you’re a first-time homebuyer or simply searching for a mortgage loan to fit your financial standing, an FHA loan may be for you. With moderate requirements and longer loan terms, this mortgage type opens the door to homeownership for those who may be just beginning their financial journey. 


How does getting a FHA loan work?

A FHA loan is special, as it’s backed by the Federal Housing Administration, which falls under the umbrella of the U.S. Department of Housing and Urban Development.

To qualify for this loan, you have to meet at least the minimum qualifications, including a down payment of at least 3.5 percent of the total cost of the home and a credit score of 580 or higher. If you have a lower credit score, you may still qualify but may need a higher down payment. 


What is the downside of an FHA loan?

Even though FHA loans may be ideal for some first time buyers, there are some drawbacks to be aware of before taking on the loan. A down payment of less than 20 percent often means having to pay for mortgage insurance in addition to your mortgage payment to protect the investment of the lender. 

An FHA mortgage usually comes with limited loan term options, so for those with unique situations, a 15 or 30-year mortgage term may not fit what they are searching for. 


What is the benefit of getting an FHA loan?

Even though there are a few drawbacks to this loan type, there are many benefits as well. Lenders of FHA loans are often lenient on credit history, opening the door to borrowers with lower credit scores.

In general, interest rates are often fixed and come with better conditions in comparison to conventional loans.  

If you’re interested in an FHA loan, consider speaking with a lender to explore your options to find the best deal for your next home purchase. 


About the Author
Author

Teresa Merelman, Broker

 Teresa's beginnings were at Fort Belvoir, Virginia. She was child #5 of 8 and born into an Air Force family that moved all over the United States but usually ended up back in the Washington, D.C. area. Teresa attended Miami University in Oxford, Ohio and received her bachelor's degree in business from George Mason University, in Fairfax, Virginia. Some of her prior careers include: computer buyer in Fairfax, Virginia; Deputy Clerk at the U.S. District Court in Denver, Colorado; Police Officer in Steamboat Springs, Colorado; and Bed & Breakfast owner in Stowe, Vermont. Teresa obtained her license as a Realtor® in 1998. She has been through many ups and downs in this profession and continues to learn every day. She very much enjoys the real estate profession and the wonderful people she has met and assisted along the way. In order to serve her clients and customers, Teresa continually attends classes and seminars. Some of her Designations and Certifications include: 

  • ABR - Accredited Buyer Representative (2003)
  • CBR - Certified Buyer Representative (2000)
  • e-PRO - Internet Certified Professional (2001)
  • CNHS - Certified New Home Specialist (2005)
  • CRS - Certified Residential Specialist (2005)
  • AHS - Accredited Home-Stager Specialist (2008)
  • TRC - Transaction Referral Certification (2009)
  • RSPS - Resort and Second Home Specialist (2009)
  • GREEN - NAR's Green Designation (2009) 
  • SFR - Short Sales & Foreclosures Certification (2009) 
  • SRES - Senior Real Estate Specialist Designation (2012)
  • AHWD - At Home With Diversity (2021)
  • SRS - Seller Representative Specialist (2021)

Teresa has also served and continues to serve on several boards:

  • Lamoille Area Board of Realtors - President and Board of Directors
  • Vermont Association of Realtors - Board of Directors
  • NEREN (MLS) - Board of Directors and Shareholder 
  • Vermont Real Estate Commission - as a member of VAR's Liaison Committee
  • Stowe Vibrancy - Board of Directors - this is a volunteer group that promotes activities in the Village of Stowe

In 2007, Teresa was named Vermont Realtor of the Year.Teresa and her husband, a local attorney, moved to Stowe in 1987. They had two sons and Stowe has been their home for the past 36 years. She still feels the Stowe area is a wonderful place to raise a family, there's always something going on. Teresa can often be found behind the lens of her camera documenting the beauty of the area and its many events.As an update, Teresa's older son is now a Doctor/resident at the University of New Mexico's Emergency Management Program. Her younger son graduated from James Mason University and currently resides in Chicago, IL as a supervisor for OKTA.