As the U.S. housing market recovers from last decade's downturn, today's home buyers aren't always flush with cash. For buyers with few funds for downpayment, loans via the Federal Housing Administration are a popular option.
The FHA allows mortgage loans with as little as 3.5% down.
About The FHA Mortgage
The Federal Housing Administration (FHA) was established in 1934, which, in U.S. history, was a period of "heavy renting". The country was emerging from The Great Depression. Just 4 in 10 households owned their homes.
At the time, the mortgage terms offered by lenders were a burden to many borrowers. To get a loan meant to make a 50% downpayment; to agree to a loan term of 5 years or fewer; and, to make a large "balloon" payment to the bank after the mortgage's first few years.
Few U.S. consumers could meet the terms of a 1930s mortgage. Meanwhile, the government wished to increase the rates of homeownership nationwide. With more homeowners, the government reasoned, neighborhoods would stabilize and the U.S. economy would get back on track.
From this, the FHA and its flagship mortgage program was born.
The main feature of the FHA-backed mortgage was its Mortgage Insurance Premium (MIP) program, a self-sufficient insurance fund through which the FHA could insure the nation's lenders against "bad loans".
In order for a bank to get the FHA's insurance on its loans, it was required to verify that its loans met the FHA's minimum qualification standards.
These rules came to be known as the FHA Mortgage Guidelines.
In time, the FHA MIP system gave banks confidence to make better loans with better terms for hopeful U.S. home buyers. Soon, the downpayment requirements for a home loan dropped; 5-year loan terms were replaced with longer terms of 15 and 30 years; and mortgage rates dropped.
The FHA is currently the largest insurer of mortgages in the world.
Benefits of an FHA Mortgage
FHA Allows A 3.5% Downpayment
The FHA Doesn't Require A SSN
The FHA Insures All Property Types
The FHA Has Flexible Credit Standards
Allows Access To The FHA Streamline Refinance
For more than 80 years, the FHA home loan program has helped U.S. homeowners purchase homes affordably and refinance them. Call us today and see what an FHA loan can do for you.
Tips You Must Know Before Buying a Vacation Home
Most people who decide to buy a vacation home typically get
the idea as the result of actually renting a vacation home instead of staying
in a hotel. The home rental business is booming as vacationers can now search
for homes to rent instead of looking at a hotel. A home is more relaxing and
can be more cost effective compared to a pricey hotel room. But before you get
too much further, here are three things you need to know about buying a
vacation home. Maintenance. You
know that owning your own home also requires maintenance. When the hot water
heater goes on the blink, you’ll need to call a service company or buy and
install a new hot water heater. You have to pay utilities, property taxes and
insurance on top of what pay each month on your mortgage. When you’re looking
at a potential purchase, do some research about what the property uses in utilities
each year. You can get that information from various utility companies. Second,
and Why Lenders Accommodate Bad Credit Home Buyers
For those with bad credit, getting a home loan seems as
likely as flying to the moon. It’s just not going to happen. Yet there are
lenders who do offer loan programs for those with damaged credit. There was a
time however that such loan programs essentially vanished from the lending
landscape just about 10 years ago when toxic loan programs began to falter.
Today however, lenders have opened up home financing to those with bad credit
in many instances. How do lenders approve bad credit and why do they do it in
the first place?
The so-called “subprime” market refers to the mortgage
marketplace where the loan programs cater to those with damaged credit. There
are some variances on lending guidelines but in essence they all share the same
basic characteristics. Applicants must be able to verify stable employment and
income. They should be employed for at least two full years and be able to
provide copies of their most recent pay chec…
Ways to Restructure Your Mortgage and Save Thousands
There are ways home owners can restructure their home loan.
Typically, when changing the nature of an existing mortgage it means
refinancing out of one loan and into another. For those who might consider
refinancing a mortgage, the biggest reason is usually because rates are lower
than when they locking in the interest rate on their loan while it was being
approved. Interest rates don’t have to fall to a “magical” level in order for a
refinance to make sense. Instead, borrowers should compare how much they would
save each month with the closing costs involved in the transaction. Doing so
will provide how many months it will take to “break even” as it relates to
closing costs. It’s less about the interest rate and more about recovering the
cost of refinancing through lower payments. Once accomplished, it’s a real
But there are costs involved, no doubt. Borrowers can work
with their lender to see if a closing cost credi…