The housing meltdown and credit crunch have greatly impacted the mortgage industry. Sub prime loans are all but a thing of the past. The government is likely to step up efforts to help the mortgage and real estate industry by improving the government backed fha mortgage programs. The federal housing administration (FHA) has been in existence for over 50 years and was one of the first government programs designed to help boost the housing industry. The role of the federal housing administration with mortgage loans is to provide insurance to a lender when a borrower follows specific guidelines set forth by the fha for a mortgage program.
It is important to note that federal housing administration does not set the standard interest rates charged to borrowers for fha mortgages. Fha mortgage rates are determined similar to every other mortgage rate, they are a bi product of the open market. Mortgage lenders determine interest rates by the supply/demand for mortgage backed bond securities, and this is how fha loan rates are priced as well.
Fha mortgage programs are available for both home purchasing and refinancing. They were often considered a popular option for first time home buyers to get into their first home as they have very minimal down payment requirements. If a borrowers is purchasing a home via fha they only are required to provide a down payment of 3%, all of which can be in the form of a gift. Fha also allows home buyers to qualify if they have non traditional methods of credit verification, such as utility bills, cell phone payments, etc. If a homeowner already owns a home and would like to try to refinance with an fha loan they may be eligible to cash out up to 95% of their homes value.
Fha loans can be a great tool for homeowners who are trying to survive the credit crunch. It is important to know that fha loans have dollar limitations based on geographic counties, require that you pay mortgage insurance for the entire loan term (regardless of your loan to value) and are not offered by every lender or bank. Fha mortgages are traditionally available for terms of 15 and 30 years, and most fha loan programs have a fixed rate for the entire loan term.
If you would like more information on Fha mortgages or research options on home refinancing visit LoanNetwork.com
Author: Oliver Kyle
