FHA Home Loans - Savior of the Market?
[ October 13, 2008 ]

“The financial world is crumbling,” “loans have dried up,” “banks are scared to lend money,” “people just can’t get loans”… In these trying economic times, these are the common headlines you see in the paper or hear in the news every day.


Frankly, I cannot believe the number of uniformed reporters who are spouting nonsense about how mortgage money isn’t available to average people. They tell you that mortgage money is only available to those with stellar credit records and lots of assets. Baloney!


These ignorant media types are just fueling fears for the sake of sensational reporting. Sure, restrictions and qualifications have tightened for conventional loans, but FHA home loans are still widely available to the average consumer with the same qualifications they’ve always had.


FHA home loans are nothing new. FHA and the Department of Housing and Urban Development (HUD) have been insuring mortgages since 1934. Coincidentally, that’s the last time our country was hit with an economic downturn on the scale of what we’re seeing today. Just like the 1930’s, FHA and FHA home loans will lead us out of this difficult housing and credit crisis. 


FHA home loans are available to purchase a new home or to refinance an existing mortgage… and yes, you can refinance a conventional mortgage to an FHA backed mortgage. 


FHA is not a direct lender, what they do is insure the loans that banks right… but, they require that banks follow certain standards for underwriting the loans. In other words, lenders are required to verify that borrowers meet the qualification standards established by FHA. 


Since FHA home loans are insured against risk, lenders are still freely giving out money via the FHA home loanprogram. 


So, while it’s true that mortgages are hard to get through a conventional mortgage lender, this nonsense that is widely spread throughout the media that average Americans cannot get a mortgage loan, is just that… ABSOLUTE NONSENSE! 


FHA home loans are still readily available, even for people with lower incomes and/or less than perfect credit. In fact, FHA home loans are pretty much the only type of loan available to people with credit payment problems. 


Loans Available though FHA:

  1. Purchase – only 3% down payment until 12/31/08
  2. Refinance – borrow up to 97% of the value of your home.
  3. Cash Out Refinance – if you’re refinancing to consolidate or take cash from your home’s equity, you can borrow up to 95% of the value of  your home.


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