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FHA Loans in the 21st Century


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									Presented by Daniel Toriola
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FHA Loans in the 21st Century By Nick Kent

Earlier this year, congress and the Bush Administration enacted the Economic Stimulus Act of 2008, in an effort to stimulate business investment and attempt to avert impending crisis and recession. Needless to say, their efforts haven't been terribly effective so far, for reasons we're all familiar with. What you likely remember about the act is that you received a $300-$600 rebate check after filing your taxes this year, but what you may not recall is that the act also affected the ceiling for FHA-insured home loans. Prior to March 6, 2008, the limit for FHA loans was $362,790. That meant that the FHA could not legally insure loans above that value. As part of the stimulus package this year (referred to as the "FHA Forward" program) however, congress authorized the Federal Housing Administration to increase their maximum loan limit from $362,790, to between $271,050 and $729,750, depending on location and the size of the home. For instance, in Denver the FHA will now insure mortgages on single-family homes as high as $406,250. The most populous areas with the highest costs of living such as New York City and Los Angeles have seen their limits increased to the full $729,750. As private mortgage insurance became widespread, and other options saw increased availability early this decade, FHA loans lost popularity, but in the past several months FHA loans have seen a resurgence. With many former sub-prime lenders recently on the edge of default, lending institutions have become hesitant to (and in some cases simply can't afford to) offer 100% mortgage loans, and FHA loans have become an alternative for consumers who otherwise would be unable to acquire financing for a new home. The Federal Housing Administration was created as part of the National Housing Act of 1934 (subsequent to the New Deal creation of the Securities and Exchange Commission), as a reaction to the collapse of the banking system in the 1930's, in order to counteract the vast decline in home ownership during the Great Depression. It's no surprise then that consumers are returning to the FHA for assistance now, as we enter what is generally considered the greatest economic threat the U.S. has faced in nearly eighty years. An important distinction to make is that the FHA does not itself originate loans, but rather insures lenders against loss, should a borrower become unable to meet the terms of the loan. That being the case, all FHA loans are not the same. Different lenders offer different terms and incentives, and for that reason consumers should consider meeting with a Certified Mortgage Planner (not the same thing as a
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Presented by Daniel Toriola
broker) who can assist them in comparing offers from the lenders who meet their criteria. With the latest polls showing continuous decrease in consumer confidence, and increase in pessimism regarding the economy, it's not surprising that we're looking to some of the same institutions for help now that we did during the Great Depression. It's impossible to say for sure what will happen over the next few years, but at least we can take comfort in something this time that we couldn't last time: we've been through it all before.

Rate1st is the United States' largest online lending network, and is proud to provide a easy, efficient and safe way to shop for an FHA loan during trying economic times. To contact a Certified Mortgage Planner about information on FHA loans, please visit http://www.Rate1st.com .

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Presented by Daniel Toriola
FHA Home Loan - What Is It Really? By Tom Maneval

Federal Housing Administration (FHA) home loans are a great option for many homebuyers and homeowners looking to purchase or refinance. FHA home loans are specifically useful to borrowers who cannot make a big down payment, who want low monthly payments, whose credit is not great and qualifying for a conventional loan is difficult for them. Congress created the FHA in 1934 and it became part of the Department of Housing and Urban Development (HUD) in 1965. The FHA is not a lender. The FHA is the largest insurer of mortgages in the world. Lenders are insured by the FHA against losses as a result of a homeowner defaulting on their mortgage loan. It insures single and multifamily homes including manufactured homes and hospitals. The FHA is the only government agency that does not cost the taxpayers anything operating entirely from the proceeds from its mortgage insurance which is initially part of the mortgage payment. This program allows a first time home buyer, who might otherwise not qualify for a home loan to obtain one because the risk is removed from the lender by FHA who insures the loan. With the recent subprime lending collapse, the FHA home loans have become cool again, as mortgage lenders and brokers are flocking to the latest FHA loan programs. FHA has been around for decades, and there are many innovative programs to help different segments of the population to realize the dream of home ownership. A common misconception is that FHA home loans are for first time homebuyers. The fact is you can only have one FHA loan at a time whether it's your second home or fifth. The mortgage limits for FHA home loans are set on an area-by-area or county-by-county basis. This type of insurance is an attractive benefit for FHA approved and authorized lenders. If the homeowner defaults, the lender gets its money from the FHA. The lender or broker works with prospects to qualify their loan application to FHA guidelines for approval for this insurance for the loan. FHA loan guidelines also provide attractive benefits to home buyers as qualification is usually less stringent than conventional loans. Plus, all FHA home loans are FULLY assumable, adding one more layer of protection for you and your family. Having an assumable loan at a good interest rate would be part of a good plan for selling your house in the future especially if the interest rates have gone up. If refinancing a home, the current loan DOES NOT have to be an FHA loan. Refinancing an existing FHA home loan is actually called a streamline refinance. FHA loans are for all homeowners that are buying, or refinancing their home. FHA mortgage loans assist existing homeowners to convert their ARM to a reduced rate refinance loan that ensures a set fixed payment every month until the mortgage is paid off. With FHA refinancing, homeowners can count on market-low mortgage rates to pull cash out up to 85%, and in some cases 95% loan to value. FHA loans are for all homeowners that are buying, or refinancing their home. Each type of FHA loan is unique and must be applied for individually. Attention is given to one's ability to make payments and handle life's expenses. Less attention is given to FICO scores when applying for an FHA loan than with a conventional loan. Qualifying for an FHA home loan is done by using a set of debt-to-income ratios that are a bit more in your favor than those used for conventional home loans.

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The following two FHA loan requirements are important for qualifying: Housing expenses should not exceed 29% of your gross income; total indebtedness should not exceed 41% of your income. FHA home loans require a smaller down payment as well. Down payments for FHA home loans are low, generally 5% or even as low as 3.5%. The finance package in a nutshell is: FHA insurance + lender financing = FHA loan. Ask your lender for assistance in learning which FHA mortgage is right for you. FHA home loans are available in rural and urban areas. FHA home loans are not loans granted by the government, but FHA home loans are mortgage loans that are guaranteed by the Federal Government. FHA home loans are generally offered at reasonable interest rates, and guarantee the mortgage company that the loan will be paid. So whether you are refinancing, buying your first home or your fifth, try out FHA.

Speak to one of our FHA Loan Specialists today.

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Presented by Daniel Toriola

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