Buying a home today can be complicated, but financing a home with FHA makes it so much easier. FHA financing is offered by the U.S. Department of Housing and Urban Development (HUD). This lending program is a lot more flexible and accepting of borrowers than most private lending options, which is what makes it such a popular choice for many people. Bad credit, money down, and other issues that would typically turn off potential lenders aren’t issues with an FHA home loan. In today’s housing market, FHA mortgage rates are the lowest and the government home finance incentives are better than the conventional mortgages. First time home buyer loans are the most common product offered by this organization, and they offer low down-payments and FHA is flexible with credit, making it easier for people to get a new home.
FHA offers affordable home financing for just about everyone. No matter what you need, you can guarantee that you will find something that suits your needs with an FHA program. FHA allows new home financing to 96.5% loan to value and home buyers only need a 3.5% down-payment. That means that if you buy a $100,000 home, you only need $3500 down. That’s unheard of, and it makes it easier for more people to become homeowners, no matter what they are dealing with or what hurdles they have to overcome.
The current FHA interest rates are lower than many other loan programs, too. That allows people to get lower payments and better rates than they might have thought possible. Whether you are a first time buyer with good or bad credit, you can finance a new home with an FHA home loan with ease. Simply talk to a lender about FHA programs that suit your needs and whether or not you qualify. There are guidelines to be met, but they are generally small and don’t disqualify too many people. Just take your time and learn as much as you can so that you are truly prepared for your new home purchase.
Just because you can get an FHA loan doesn’t mean that you should automatically go buy a house if you really don’t want it or can’t afford it. Make sure that you are able to afford their low down-payments and loan payments and that you really want to be a homeowner. This is a big investment and while the flexibility of FHA loans is nice, it doesn’t mean that you have to buy. If you have been looking for a new home and a new lending solution, however, this might be exactly what you have been searching for.
Most people don’t know that assumable loans exist and many people do realize how powerful they can be when you are selling your home. Let’s face it; in this housing market you need all of the help you can get. This is especially true in today’s soft housing market where it is difficult to move homes. A FHA assumable mortgage can be an invaluable tool you can use to entice buyers and encourage them to purchase your home. An assumable mortgage is when the buyer takes over your loan and finishes paying the balance that is owned on the house. The major reason people enter into this type of agreement is because the interest rate on the loan is better than they could get anywhere else.
A FHA Assumable Loan Can be a Valuable Tool When You Sell your House
For example, if the assumable home loan has a mortgage rate of 5% but the lowest interest rate the buyer could get was 7.25% then it would be in both of your best interests if the buyer took the lower rate. This type of mortgage is more popular when the mortgage rates are high as everyone is looking for a good deal on interest rates. The only person that loses out when a buyer assumes the seller’s loan instead of getting a new one is the lender. Therefore, conventional home loans are not assumable. Conventional loans have a clause that requires the loan to be paid in full before it can be sold. The only loans that offer an assumable option are the VA and FHA assumable mortgage loan.
Leverage Your Home with an Assumable Mortgage from FHA that offers many benefits:
Getting an assumable mortgage can be a long term benefit worth investing in. So if rates rise, assumable loans offer a hedge against inflation and higher rates which will make it easier to sell your home. The current FHA mortgage rate is still available near the record low. When deciding if you want to get an assumable mortgage or not, you should consider the length of time you will be living in your home. If you know that you are only going to have your home for 10 or 15 years, then investing in an FHA assumable mortgage may be your best option.
The other thing you need to consider is what to do about the equity that is built up in your home. The buyer can make up this difference by making a large down payment on the home that covers some or all of the equity. Additionally, you can ask for the value of the assumable mortgage which is generally the difference in the current interest rate and the rate on your loan. It is important to note that the buyer must be approved by the FHA or VA to take over an assumable loan.
Reuters reported that FHA mortgage rates have fallen to their annual low and this has spurred increased FHA loan activity for first time homebuyers and homeowners who were unable to refinance in 2010. Most finance analysts anticipate that interest rates will rise in 2011, so many U.S. consumers are rushing to lock in while FHA rates are still low and affordable. Borrowers who already have a FHA mortgage have the luxury of qualifying for the acclaimed FHA streamline refinance that enable FHA customers to get a lower rate loan quickly and cost effectively.
The Federal Housing Administration has been steadfast with regards to FHA mortgage assistance and foreclosure prevention programs. For the last few years, the one loan program that struggling homeowners could turn to was the FHA home loan. With the approval of Congress, both the Bush and Obama Administration have extended financial aid in the form of FHA mortgage relief.
HUD, Fannie Mae and Freddie Mac have come together to create targeted loan relief to borrowers who financial hardships, like a loss of home equity, employment issues and even bad credit. FHA loan requirements have tightened somewhat in the last few years, but there are still significant opportunities for homeowners to receive financial assistance with FHA home refinancing. FHA confirmed a new program, the FHA short refinance and it will go live on September 7th. This refinance program will actually enable homeowners who are underwater to refinance into a lower mortgage balance. To qualify, homeowners must be current on a non-FHA loan to refinance into an FHA mortgage when their lender agrees to write off at least 10% of their principal.
US Government Continues to Fund FHA Mortgage Relief Programs Listed below are the unique conventional and FHA loan programs created to provide mortgage relief:
US Government Continues to Fund FHA Mortgage Relief Programs
Today FHA mortgage rates have fallen to record levels. Qualified borrowers can lock a 30-year fixed loan with a rate of 4.125% and the 15-year loan features a rate 3.875%. Don’t miss out on these once in a lifetime home financing opportunities.
FHA home financing has played a crucial role in helping Americans become homeowners and they have been offering mortgage products since the Great Depression. Today, FHA home loan programs support almost 35% of the home financing market. FHA is the home financing arm of the Housing and Urban Development Department. It oversees Fannie, Freddie, FHLB and other mortgage lenders and provides mortgage insurance on loans made by the FHA lenders for lower-income and first-time buyers.
Is FHA Home Financing Getting Better?
FHA now insures about 5.4 million 1-family mortgage loans at a combined value of $675 billion, making it the world’s largest insurer of mortgage loans. HUD continues to offer FHA refinance and purchase loans in all 50 states.
Together with Fannie and Freddie, the FHA backs 90% of new American home loans. FHA mortgage programs have received a lot of criticism recently, because of the depleted FHA loan reserves and increased foreclosures but the agency was the only financing company that stepped up to fill the void when the subprime mortgage market crashed in 2006. FHA again stepped up in 2008 when conventional mortgage lenders and private insurers were squeezed by the credit crunch. FHA lenders remained focuse on improving the housing markets by providing better FHA home loans in 2011.
As we have reported in recent articles, FHA defaults had increased to a level that put the FHA loan programs in jeopardy so FHA guidelines could be tightened. The Department of Housing and Urban Development announced new measures will help FHA reduce foreclosures, control risk, continue supporting housing recovery The Federal Housing Administration Commissioner David Stevens today unveiled three specific policy changes to strengthen the FHA’s capital reserves while enabling the agency to continue to fulfill its mission to provide access to homeownership for underserved communities.
In addition to earlier steps taken to manage its risks and to boost reserves, FHA is proposing to update the combination of credit and down payment requirements for new borrowers; reduce seller concessions from six to three percent; and tighten underwriting standards for manually underwritten FHA mortgage loans. “These are the latest in a series of changes to allow the FHA to manage its risk better while continuing to support the nation’s housing recovery,” said Stevens.”
1. Update the combination of credit and down payment requirements for new borrowers. New borrowers seeking FHA home financing will be required to have a minimum FICO score of 580 to qualify for FHA’s flagship 3.5 percent down payment program. New borrowers with credit scores of less than a 580 will be required to make a cash investment of at least 10%. Borrowers with credit scores of less than 500 will no longer qualify for an FHA-insured mortgage.
2. Reduce allowable seller concessions from six to three percent. Allowing sellers to contribute up to six percent of the home’s sales price to offset a buyer’s costs exposes the FHA to excess risk by potentially driving up the cost of the home beyond its appraised value. Reducing seller concessions to 3% will bring FHA into conformity with industry standards.
3. Tighten underwriting standards for manually underwritten FHA home loans. When using compensating factors in the underwriting process, FHA lenders will be required to consider those factors which are the best predictive indicators of loan performance, such as the borrower’s credit history, loan-to-value (LTV) percentage, debt-to income ratio, and cash reserves.
Unless you are in the military, FHA offers the best home financing for first time homebuyers. New home buyers like FHA home loans because they only need a 3.5% down-payment and low FHA rates ensure affordable monthly payments. FHA mortgage rates have dropped to record levels in 2010 so first time home buyers may qualify for 30-year fixed rate mortgages with rates as low as 4.375%.
Affordable FHA Home Financing with the Lowest Rates Ever!
Home sales prices have tumbled in many regions of the U.S. so utilizing an FHA home loan to purchase a foreclosure or short sale may prove to be a wise investment. Congress is considering to raise the minimum down-payment on FHA first time home buyer loans from 3.5 to 5%, so time is of the essence.
FHA guidelines enable borrowers with less than perfect credit to still qualify for home financing if the applicant has notable compensating factors. FHA requirements continue to demand verifiable income documentation like W2’s, tax returns and pay-stubs. The Federal Housing Administration has never allowed stated income home loans and with the high defaults rates, it’s doubtful the administration ever will. This can pose an obstacle for many self-employed borrowers, but FHA home mortgage loans are not for everyone.
Loan Advice for First Time Home Buyers
The $8000 first-time homebuyer tax credit is no longer available but with FHA home loan rates as low as 4.375% a person could become a homeowner on a $300,000 house for under $1,500 a month. Home prices and FHA interest rates are sure to rise soon so home financing with an FHA mortgage make sense today!
With FHA, cash out refinancing is available to 95%. FHA streamline refinance loans, rate and term refinancing and home purchase loans are available to 97.5% loan to value.
Refinance and Avoid a Foreclosure
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