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.
Adjustable or Fixed? That’s one of the decisions you’ll need
when considering a new mortgage either for a purchase or for a refinance. When
rates are at relative lows and the expectation is to keep the property well
into the future it can make sense to latch onto a fixed rate loan. A fixed rate
loan is much easier to budget for as the home owner knows how much the mortgage
payment will be throughout the life of the loan. It’s easier to plan for. Pick
out a fixed rate term, lock in the rate and forget it. But does that mean an
adjustable rate mortgage is rarely an option? Should borrowers ever even
consider a variable rate loan? The answer, even in times of low rates, is yes.
There are times when an adjustable rate mortgage can be beneficial.
Adjustable rate home loans can have an interest rate change
at various points throughout the life of the loan. For a 1-year loan adjustable
rate loan, the rate can change once per year based upon a…
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…
When you talk to your loan officer and get an interest rate
update more than likely the loan officer will turn directly to the 30 year
fixed rate loan. Why? Because it’s the most popular loan choice, that’s why.
It’s also the most heavily advertised and promoted. When lenders quote and
advertise a home loan program they also are required to quote the appropriate
annual percentage rate, or APR. Lenders have multiple loan programs from which
to choose from fixed to adjustable to variable but there really isn’t the time or
space when doing so to quote every loan program across the board. Instead, the
30 year loan term is the most common and most familiar with borrowers. But are
borrowers short-changing themselves when they only look at a 30 year term?
Let’s look at why a 15 year mortgage can make sense.
There’s a tradeoff between the 30 and 15 year loan. The 30
year loan, because it’s spread out over a longer period, will have lower
monthly payments com…