Top Five Reasons to use FHA

Top Five Reasons to use FHA

Due to the Sub Prime meltdown now more than ever Borrowers are going back to FHA financing. FHA loans have been more attractive because of the amount of financing and the low mortgage interest rate. FHA is short for Federal Housing Administration the loan itself comes from a lender and is insured or backed up by the federal government. This loan reduces the amount of down payment requirements increasing the amount of borrowers that can qualify. The Top 5 reasons to use FHA are important to know keep in mind we believe the more knowledgeable the buyer is the more comfortable he becomes.

 Top Five Reasons to use FHA
  1. 3% down payment
  2. Allow you to finance the closing cost
  3. FHA has set limits on the amount lenders can charge for some closing cost fees (e.g. origination no more than 1% of mortgage).
  4. Maximum mortgage amount can vary significantly by area. FHA adjusts this amount periodically based on certain economic variables. You should check with your local FHA office or approved lender to determine your maximum mortgage amount.  Click here to contact us.
  5. Under certain conditions, automatic cancellation of the FHA mortgage insurance premium

Get to know the Major Lenders

  • Fannie Mae – Nickname for Federal National Mortgage Association (FNMA).
  • Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac) – A quasi-governmental, federally-sponsored organization that acts as a secondary market investor to buy and sell mortgage loans. FHLMC sets many of the guidelines for conventional mortgage loans, as does FNMA.
  • Federal Housing Administration (FHA) – An agency within the Department of Housing and Urban Development that sets underwriting standards and insures residential mortgage loans made by private lenders. One of FHA’s objectives is to help make affordable mortgages available to homeowners with low or moderate income. FHA loans may be high loan-to-value, and they are limited by loan amount. FHA mortgage insurance requires a fee of 1.5 percent of the loan amount to be paid at closing, as well as an annual fee of 0.5 percent of the loan amount added to each monthly payment.
  • Federal National Mortgage Association (FNMA or Fannie Mae) – A private corporation that acts as a secondary market investor to buy and sell mortgage loans. FNMA sets many of the guidelines for conventional mortgage loans, as does FHLMC. The major purpose of this organization is to make mortgage money more affordable and more available.