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FHA Mortgage Loans
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Bad Credit Loans Are Available
Finding home mortgage loans are a reality for people with bad credit. Bad credit mortgage loans are offered by sub prime lenders. Hard money loans and bad credit mortgage loans are reserved for borrowers with poor to bad credit. There are basically two types of loans in the context of traditional home buying: A-paper loans and subprime loans. A-paper loans go to those who have good credit -- as de... Read loans article
Currency Loans
Over the last 10 years there has been a big clamour for the Euro, with many of our European counterparts having already introduced the currency into their economies. The UK has been a little slow in taking up the Euro, however as the inevitable push towards closer European ties continues - with many suspecting the resistance will be ambushed by politicians - the Euro will come to play a larger par... Read loans article
FHA Mortgage Loans
FHA mortgage loans are alternatives to conventional financing for your home purchase. The FHA (Federal Housing Administration) helps to make low cost home loans available to thousands of new and current homeowners each year. FHA mortgage loans require minimal down payments and the interest rate is typically slightly lower than prevailing conventional rates.
The FHA currently insures more than 800,000 mortgage loans. This agency has helped originate more than 33 million since it was created in 1934 as part of the New Deal. The FHA does not fund the mortgage loans itself. It does insure the lender that it will not incur any loss if the borrower defaults. In this way, lenders are encouraged to make loans to low and middle income borrowers to whom they would not otherwise extend credit.
Buyers of single family homes can put as little as 3% down when obtaining an FHA mortgage loan. Good credit history is not necessary, although is definitely a "+." Income to loan payment, and to total monthly payment, ratio requirements are slightly less stringent than for conventional mortgage loans. The FHA sometimes will also help finance the closing costs. Ask your lender about this. Requirements for this kind of assistance vary widely from locale to locale.
This sounds pretty good, doesn't it? Well, "not so fast..." The FHA requires extensive property inspections that cost the seller lots of time and money. Largely because of this, most sellers will not accept an offer if the buyer intends to obtain FHA-insured financing. The acronym "FHA" unfortunately has acquired bad connotations for many real estate professionals and their clients.
Also, the FHA severely limits how much the lender can charge in fees. The bank cannot lose money because of the FHA insurance. However, it cannot profit as much as when it commits its money to other mortgage loans. Lenders have to be FHA-approved in order to make FHA mortgage loans. Few lenders choose to become FHA-approved.
However, there is a big exception to this circumstance. The FHA serves locales (and, of course, the people who wish to obtain financing for homes in these areas) that would not otherwise be attractive to lenders. Most very large, big city lenders are FHA-approved, and a significant portion of the home loans that they originate are FHA mortgage loans.
If you intend to move into your own home in the country or in an "upper middle class" suburb, the FHA probably won't be of use to you. But perhaps you want to live right in a major metropolitan area with all its amenities close by. If so, and if a large down payment is a problem, an FHA mortgage loan could be a great way for you to finance the purchase of your home.
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No Money Down Home Loans
If you have been holding off purchasing your home because you don't have the cash on hand for a down payment, there are programs to help you qualify for the home loan. The most popular no money down program is the 80/20 or "piggyback" loan. Here are the basics you need to know about no money down home buying that will help save you money.
No money down mortgage loans have been around for sometime now; however, these loans have had a major disadvantage in that the lenders would require you to purchase Private Mortgage Insurance as a condition of approval for the loan. Private Mortgage Insurance is expensive and does nothing to protect the homeowner, only the mortgage lender.
80/20 mortgage loans do not require the borrower to purchase private mortgage insurance. The reason for this is that when you borrow with an 80/20 mortgage you are actually taking out two loans. Your primary mortgage will be for 80 percent of the purchase price and the remaining 20 percent will be from a second lender. Because you are taking out two loans to fund the purchase of your home, you will have two monthly payments to make.
Because you will have the necessary down payment in the form of your "piggyback" loan, you will qualify for a better interest rate on your primary mortgage loan. The interest rate on your second loan will be higher because this lender assumes more risk than your primary mortgage lender. There are options available for the piggyback loan; you may have the choice of interest only payments, an adjustable interest rate, and a home equity line of credit for this loan. If you choose one of these options for your second loan you may have to pay a higher interest rate, so it pays to shop around before choosing a lender. You can learn more about your home loan options by registering for a free home loan guidebook.
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