We’ve used our knowledge and experience as a government-approved FHA mortgage lender
to put together a detailed summary about FHA loans so that you can learn more about
them. By the time you're done, you'll be armed with everything you need to make an informed
decision about whether an FHA loan is a possibility for you.
FHA History
Before we give you the goods on how an FHA loan could help you now, it's best to
give you a short history lesson. The Federal Housing Administration (FHA) was founded
during the Depression to stimulate private lending for construction and home repair.
The FHA, which became part of HUD in 1965, doesn't lend money. It provides insurance
on loans that meet its standards. In the late 1990's, FHA loans began to lose favor
when home values began to inch upwards, surpassing FHA mortgage limits, and sellers
balked at FHA's stringent appraisal guidelines.
However, FHA loans have become a viable option again. Recently, the FHA has relaxed
many of their rules including:
- Easing their formerly strict appraisal process
- Eliminating restrictions on closing costs
- Adopting electronic processing
- And increasing loan limits, among others.
Today, the FHA offers a safe — although still somewhat rigid — financing
alternative that's attractive to many.
What Is An FHA Loan?
Well, now that you know the background, we'll give a brief rundown of what an FHA
loan actually is. Now remember, the FHA does not make loans or guarantee loans.
It simply insures them. The insurance minimizes the default risk private lenders
face when buyers put down less than 20 percent. This backing supports all your familiar
loan structures:
- Fixed-rate
- Adjustable-rate
- Purchase/rehabilitation
And without further approval from FHA, its approved lenders are authorized to:
- Take FHA loan applications
- Process FHA loan applications
- Under write and close the FHA loan
In a nutshell, these are just federally-backed mortgage loans from lenders. To learn
if an FHA loan is a good fit for you, and how Refinance.com can help you figure
it out, read on.
Is An FHA Loan Right For Me?
So, now that you've got the basics under your belt, now's the time to find out why
an FHA loan is a wise choice for many. This is especially true if one or more of
the following apply to you:
- You're a first-time home buyer
- You don't have a lot of money to put down
- You want to keep your monthly payments as low as possible
- You're worried about your monthly payments going up
- You're worried about qualifying for a loan
- You don't have perfect credit
If any of these things describe you, then an FHA loan may be a good option. Why?
FHA-insured loans offer many benefits that make them very appealing, such as:
- Low cost: FHA loans have competitive interest rates because the federal government
insures the loans for lenders.
- Small down payment: FHA loans have a low 3% down payment and the money can come
from a family member, employer or charitable organization as a gift. Other loan
programs don't allow this.
- Easy qualification: Because FHA insures your mortgage, lenders may be more willing
to give you loan terms that make it easier for you to qualify.
- Less than perfect credit: Even if you have had credit problems, even bankruptcy,
it's easier for you to qualify for an FHA loan than a conventional loan.
- More protection to keep your home: The FHA has been around since 1934, which means
it isn't going anywhere. So it offers many options to help you avoid foreclosure
to prevent you from going anywhere either.
Now you should have a pretty good understanding of what FHA loans are and how they
can help. But if you'd like to learn more or you just feel that your situation is
the exception, just give us a call at 1-800-734-REFI. We're a government-approved
FHA mortgage lender so take heart that we can answer all your FHA loan and general
mortgage questions.
