Federal Housing Administration (FHA)
The Federal Housing Administration(FHA) provides mortgage insurance,
backed by the U.S. government, on loans made by any qualified lender
protecting them from loss if the homeowner should default on the
mortgage loan throughout the United States and its territories.
FHA has now become the single largest insurer in the world, with over 34
million properties insured since 1934. Ever since then, the FHA
has continued to help low to medium income borrowers obtain the dream of
owning a home.
Without this help, owning a home would not be an option for many
borrowers over the last 70+ years. The FHA to this day retains
those original principles helping 100's of thousands every year.
If
your ready to take the step towards purchasing your own home, ask
yourself these questions:
- Do I have a steady source of verifiable income and have I been
employed on a regular basis for the last 2-3 years?
- Do I have a good record of paying my bills? These can include
bills like rent and/or utilities that would not normally show up on
a credit report.
- Do I have few outstanding long-term debts, like car payments?
- Do I have money or access to money(family, employer, etc.) for a
down payment?
- Do I have the ability to pay a mortgage every month, plus the
additional costs associated with the mortgage - taxes, pmi and
homeowners insurance?
If you can answer yes to all of them, chances are good
you'll
qualify for a FHA mortgage loan
There are some big advantages for borrowers who qualify for FHA loans:
- Guidelines that are less restrictive then conventional loans
making it easier for those with credit issues such as bankruptcy to
obtain a loan.
- Down payments of 3%, with funds allowed to come from a family
member, employer or charitable organization(this is not always the
case with conventional loans).
- Many
closing cost may be added to the loan, keeping your out of
pocket cost lower.
- First-time homebuyers program.
- FHA loans may be used for purchases, refinances and in some
cases cash out refinances.
- Fees charged by lenders are limited by FHA. Example - the
origination fee may not be more then 1 percent and the tax service
fee is not allowed.
The current FHA mortgage limit ranges due to the Stimulus Package
are $172,632 to $729,750.
Click
here to check your area.
Insurance premiums (mortgage insurance) charged by FHA are the
main disadvantage with FHA loans. You'll pay a onetime nonrecurring
insurance premium fee of 1.5% at closing, this can however be added
to your loan balance. There is also a yearly 0.5% of balance
insurance premium, this fee is divided by 12 and added to your
monthly mortgage payment.
If you've ever had an FHA loan, it would be in your best interest
to check with the US Department of Housing and Urban
Development(HUD) to see if you are owed a refund, as millions go
uncollected every year.
Click
here for direct access to the (HUD) refund page.
For more information on FHA programs contact your local HUD office: