HomeBuyerCafe.net

Home Loan Equility

Powered by Ajaxy
  • Facebook
  • Pinterest
  • Twitter
  • First Time
  • Credit Rating
  • Income Requirements
  • Down Payment
  • Mortgage Types
  • Resources
    • Contribute your Knowledge
  • Ask an Expert

FHA Loans

During the boom of sub-prime lending, when anyone and their mother qualified for a mortgage, FHA lending was almost non-existent. Conversely, during the past several years anyone who does not have a 20% down payment or who has sub-par credit turns to FHA as the only solution.FHA

The Federal Housing Administration (FHA) was formed by Congress during The Great Depression in order to stimulate home ownership in the United States. Later it became part of the Department of Housing and Urban Development (HUD).

FHA insures lenders against defaults on mortgages that otherwise would be too risky for lenders to entertain. Risky loans are those with very low down payment (as low a 3.5%), credit scores below 600, or a debt-to-income ratio as high as 58%, etc.

The down side of FHA financing is it’s cost. Though interest rates for such loans are similar, sometimes even lower than rates on Fannie Mae and Freddie Mac insured loans, their costs are made higher by the up-front and monthly Mortgage Insurance (MI) premiums. Currently, the upfront MI is as high as it has been.

Another downside to FHA financing is the appraisal process. While a conventional (non-FHA) appraisal is mainly an estimate of the market value of a property, an FHA appraisal includes a safety inspection. Anything that may constitute a hazard, no matter how insignificant, has to be noted by the appraiser and will have to be fixed before a closing can take place. Such examples are cracks in walls, broken windows, steps without handrails, etc. Sometimes sellers refuse to spend money on these repairs, which leads to the whole deal falling through. The way to get around that is a specific type of FHA loan called 203K, which is described here.

 

Comments

  1. Natalie says

    April 16, 2016 at 8:13 pm

    I was just looking at your FHA Loans site and see that your website has the potential to become very popular. I just want to tell you, In case you didn’t already know… There is a website service which already has more than 16 million users, and most of the users are interested in topics like yours. By getting your website on this network you have a chance to get your site more visitors than you can imagine. It is free to sign up and you can read more about it here: https://yxbp.com/5kje – Now, let me ask you… Do you need your website to be successful to maintain your business? Do you need targeted visitors who are interested in the services and products you offer? Are looking for exposure, to increase sales, and to quickly develop awareness for your site? If your answer is YES, you can achieve these things only if you get your site on the service I am describing. This traffic service advertises you to thousands, while also giving you a chance to test the network before paying anything at all. All the popular websites are using this service to boost their traffic and ad revenue! Why arent you? And what is better than traffic? Its recurring traffic! That’s how running a successful website works… Here’s to your success! Read more here: https://janluetzler.de/9zw

    Reply

Trackbacks

  1. Review of Yahoo! Finance Article says:
    May 11, 2014 at 2:44 am

    […] Insurance (MI) can be cancelled at any moment once a borrower reaches 80% loan-to-value. Usually FHA-insured loans can never be canceled, and if they can, MI loans require a minimum of 11 […]

    Reply
  2. FHA Loan says:
    January 24, 2015 at 11:57 am

    […] previously explained on our website, FHA loans had very high costs. Although FHA loan requirements are not strict and interest rates are […]

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Powered by Ajaxy
  • Facebook
  • Pinterest
  • Twitter

RSS Unknown Feed

Copyright © 2023 HomeBuyerCafe.net

Privacy Policy · Terms of Use · Sitemap · Contact

Cookies

This website uses cookies to ensure you get the best experience on our website. Learn more.