FHA Looking Better Every Day
Jan 20th, 2008 @ 5:08 PM by Alden Smith
Rates on 20 year fixed mortgages continue to fall. Taking a look at Loan.com’s front page, you can see that today’s national average is 5.79%. Although this rate is good, you can pretty much bet that not a lot of people are going for a new mortgage or refi. The evening news tonight spoke about the effect that this has on not only the housing market, but Wall Street. It is understandable that people selling a home do not wish to sell it for less than what it is worth, or what they have in it. And buyers are as always shopping for the best deal.
The FHA
More than $140 billion in adjustable rate mortgages were adjusted in 2007. Another $380 billion are scheduled to reset higher this year. Typically, the home owner would simply refinance, and be done with it. But now, tighter credit scores and greater restrictions are taking that option away from a lot of people. Enter the FHA. The FHA is making a big comeback with their offer to help with a type of loan that has been available since the 1930’s. FHA typically requires a 3% down payment, and it is not overly critical of where it comes from - whether a relative or a secondary loan. Their requirements for a loan are much more lenient than other banking institutions, and its relaxed guidelines are a real boon to homeowners in need of a fix but not having a huge amount of money for a down payment.
They are also a good place for people to get a loan for a first time home, because of their relaxed guidelines and the 3% advantage. One must be able to prove capability of making the monthly payments and have other requirements, but do not have to come up with the just-about standard 20% down for a new home.
It would be a good thing to see people taking advantage of this program. Being a governmental entity might turn a few people off right now because of the state of the economy, but we have to consider that many people are running out of options. The FHA is starting to look better already!