While the Federal Housing
Administrations (FHA) home loans was sort of swept under the rug for a decade
or so due to the housing market rise, the FHA loan has actually been around
since the 1930s. Since then, hundreds of thousands -- if not millions -- of
Americans have used the service over the years to turn the dream of
homeownership into a reality.
Only in recent years -- starting in
the 1990s -- had the FHA home loan seemingly disappeared. This was because most
home prices were starting to rise above the FHA home loan maximum with most
tract homes costing north of $300,000 and many other homes being well over half
a million dollars.
Now that the housing market has gone
down and shifted back to a buyer's market, the FHA home loan has made its
timely return.
How it Works
The FHA itself does not actually
make a mortgage loan; rather, it insures a mortgage loan, thus lowering the
risk that a lender is taking when a buyer puts down less than 20%.
This procedure allows buyers with
less immediate funding and without a large lump of cash just lying around to
put an offer on and purchase a house.
The FHA home loan does, however,
have a maximum mortgage limit, meaning that the price of a home cannot exceed a
specific amount and the mortgage loan itself cannot exceed another specific
amount. As of 2009, the mortgage limit was $625,000, and the loan limit was in
the $400,000range though these numbers do vary from county to county all over
the country.
The Good about FHA Home Loans
Even with a poor credit history and less
than great credit 'score,' you may still qualify for an FHA loan. In fact, even
after a foreclosure, you may qualify, but you may have to just give it a couple
of years.
Another amazing feature is that a
non-resident can co-sign on an FHA loan, such as a parent or guardian of a
first-time homebuyer. These features and others are all geared towards helping
people get on their feet again and gives them a shot at home ownership.
Finally, the best being about FHA home loans is that the interest rate on these
loans is at 3.75% with a 30-year fixed rate, which is a great interest rate to
get!
There's More Good News
Although an FHA mortgage loan will
always require upfront monthly mortgage insurance and insurance payments, which
will end up having you pay more per month, the fact that you are able to
practically put no money down means that the upfront a month to month payment
may very well be perfect for your financial situation.
Remember that if you have any
questions, please feel free to contact us at Indigo Mortgage today because our
expert, professional team knows all there is to know about FHA mortgage loans,
and no one else cares more about your loan than we do!
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