subject: The Fha Mortgage - Lifeguarding Those In Need [print this page] This year in the housing industry, foreclosures are higher than any previous year, making vacant homes on the market rampant. And, with many companies laying-off employees and the unemployment rate increasing, this is just the beginning, as owners begin failing to pay their mortgages. Although the crisis is not likely to subside before it worsens, there is a guardian angel that is lifeguarding those in difficult times, and that is the FHA mortgage.
The Federal Housing Administration is a loan which many thought to be dead and gone, but in the current economical crisis it has become the most popular choice of loans for borrowers, which is insured by the FHA. While a few years ago there were only four percent of these loans on the market, today they comprise over 30 percent of all loans on the market. The FHA mortgage is obtained on one to four family dwellings which the owner must occupy, making the loan unavailable to those wishing to invest in real estate. It is also only available to those that do not already have a FHA mortgage.
The FHA loan limits will vary from state to state and county to county. It is not used, however, in high value homes or lots. The limits of the loan will depend on the condition of your home, as well.
The FHA mortgage is available through private lenders for qualified borrowers. And, the loan is fairly easy to obtain, as the requirements are not strict. And, what is even more attractive about the FHA mortgage is with even a minimum capital required of greater than 3.5% it is a savings compared to the 10 to 15 percent deposit that man conventional loans require.
To obtain an FHA loan an appraisal of the property will be required. Beyond the physical inspection of the property, the applicant must disclose all "sales concessions" to the appraiser. This will include all points, fees, downs, closing cost assistance, incentives and gifts. The FHA will have a list of closing costs which is considered to be reasonable and customary, which include:
- Attorney's fees
- Lender's origination fee (one percent maximum)
- Inspection fee (up to $200)
- Appraisal fee
- Title insurance and title examination fee
- Credit reports (actual cost)
- Property survey
- Transfer taxes and recording fees
There will also be certain credit history guidelines that the borrower must pass before qualifying for the FHA loan. With a credit score of 620 or over, the applicant will qualify through the automated application process. Score below 620 will be processed manually, with the addition of an interview with the applicant.
For those applicants re-establishing credit after a Chapter 13 bankruptcy and are still paying, will be eligible after one year after filing, and those who filed a Chapter 7 are eligible after two years from their filing date.
If the applicant has gone through a previous foreclosure, they will be eligible after three years from the foreclosure date, with the condition that they have established good credit in the interim. All civil judgments must be paid off and any delinquency on federal debts will disqualify the applicant.
So, whether you are looking to purchase or refinance a home the FHA mortgage is definitely worth looking into.
