Why Bother With FHA?

Posted by Nick Niesen on November 8th, 2010

For my people it is the only way they will be able to purchase a home in their lifetime. So, if you are planning to purchase a home in the next year it would to your benefit to find out as much as possible on FHA and any other programs that might be available to you. Most of these programs are not permanent so it is important to act quickly as things change.

So what is FHA?

The Federal Housing Authority AKA FHA, is a government agency established in the 1930, 1934 to be exact, it was created as a means to improve home ownership by providing insurance protection to the lenders who provide mortgages to homeowners.

It is important for you to understand that FHA is an insuring agency; it does not make actual loans.

So what kinds of loan does it insure?

The most common and popular of the program are the following three:

1) 203(b) they are 10,15,20,30 year fixed rate periods.
2) The 203(h) is designed to help victims of major disaster who have lost their homes, and are in the process of rebuilding or buying a new home.
3) 203(k) is focused for repair and rehabilitation of single family properties.

The bottom line is that thanks to these loans you may be able to purchase your next home as the required credit score is very loan, the minimum credit score is currently 580. Refinance is also available as long as you have 85% loan to value.

There are many other advantages in using FHA; they make it possible to get a loan in many cases where conventional lenders would walk away. It is important that you understand that not all lenders are not necessarily FHA approved, if they are not approved they can not provide the FHA option. All lenders, mortgage brokers must go through a lengthy, timely and expenses process to get approved with FHA.

As you interview prospecting lenders ask if they are FHA approved.