What’s Happening with FHA Mortgages Today?
Providing more loans than any other organization, the FHA was established in 1934 and has given loans to over 35 million borrowers. Just to be clear, the FHA insures your loan, it does not fund it. FHA makes it safer for lenders to grant loans because they know that the FHA will pay off whatever is left should you default.
President Bush convinced Congress in 2006 to pass a proposal to modernize the FHA, which gave deserving families the opportunity to purchase homes. The mortgage rate for the FHA was just 5.5 percent when the proposal was passed. (Here’s a quick peek at the rates for those looking to compare mortgage loans. Current FHA mortgage rates dictate that for a 30 year fixed loan with 1.875 points, the interest rate is 6%. You will also get an interest rate of 6% for a 15-year fixed loan, but the points will only be 1.25.) An FHA loan, if you are a borrower, could be your best option, for a couple of reasons. To start with, you don’t need immaculate credit to get a loan. Lenders have become far more selective about who they lend to, thanks to the sub-prime loan fallout. Simply having average or slightly better than average credit isn’t enough. Considering other things like your income, debt-to-income ratio, and a few other things, you might still be able to qualify for an FHA loan.
Bankruptcy can be one other thing that impairs people. Depending on other factors, people with bankruptcy can still be considered for a loan. If you are really concerned about whether you can secure financing, and you have poor credit or a bankruptcy on record, then you need to get debt consolidation services and/or get debt management. Typically, people can get help with making the right steps to reduce their debt-to-income ratio, not to mention potentially improving their credit score.
Typically, FHA loans require a much smaller than typical down payment to get the loan. Some borrowers will see this as an added incentive. Many people can actually benefit from the lower down payment by using the saved money as investment money that will give a return and grow over time.
FHA loans are meant to help responsible and deserving individuals purchase their very own homes. This is one government programs that actually works pretty well.
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- FHA 203K Loan – Benefits Of FHA Home Improvement Loans
- FHA Home Improvement Loan – How To Qualify?
- Bankruptcy or Consumer Credit Counseling?
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