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Guest Post -- FHA Loan Basics and History Arlington Virginia CondosPosted by Jay Seville on Wednesday, March 2nd, 2011 at 3:54pm.
Arlington Virginia Condos and FHA loans Clarendon
FHA loans offer several advantages to individuals and families interested in purchasing their first home. Through this federally funded program, consumers have a greater chance to qualify for private mortgage loans. Designed to benefit lower-income households, an FHA loan is a desirable option for first time home-buyers who have limited funds to use as a down-payment. FHA loans are a premium option for first time home-buyers who have acceptable debt-to-income ratios and are in good standing with their credit.
While the FHA loan program has many benefits for home-buyers, it is not the best option for everyone when it comes to mortgage loans. FHA Loans are not suited for higher-priced mortgages. It can also be determined that some FHA Loans have upfront and monthly mortgage insurance premiums which are more expensive than private mortgage insurance options. Always weigh the pros and cons of all available options before making the final decision to pursue an FHA loan.
It is important to understand that an FHA loan is not a physical financial loan. The Federal Housing Association does not approve or deny loans directly, nor do they have any involvement with the planning or building of homes. An FHA insured loan is the provision of mortgage insurance against possible default of the borrower against the lending financial institution.
The FHA investigates the financial history and current debt-to-income ratio of an applicant. Once the FHA concludes that the risk is favorable, eligibility of FHA insurance loans are granted to the applicant, who now becomes the borrower. The Federal Housing Administration insures the lending financial institution against financial loss, should the borrower fail to meet the terms and conditions of the mortgage. FHA mortgage insurance also encourages lenders to approve mortgage loans to otherwise credit-worthy borrowers, a result of the FHA guarantee.
The Federal Housing Administration was established as a United States government agency in 1934, as a fundamental result of The National Housing Act. The FHA loan program was created during the Great Depression. After a tremendous spike in foreclosures and a lack of banking structure for property debt retrieval, the Federal Housing Administration was created. FHA federal assistance loan programs began as part of a new construction of the failing housing market in America.
These programs succeeded in minimizing foreclosures, reducing unemployment and promoting new growth in the housing market. The FHA loan programs were established by the federal government with the intention of bringing a higher level of quality to housing standards, as well as creating programs that provide lower-income households with the opportunity of home ownership.
By practicing these new lending services, many more consumers became eligible for a mortgage for McLean Real Estate. This also increased the market size for single family homes, as home mortgages became more attainable. The Federal Housing Administration loan program has been successful in all that the ways it was created to be, and has helped millions of consumers obtain their first home since its creation in 1934.
The FHA mortgage insurance loan has experienced a large amount of success in providing options for lower-income households. An FHA insurance loan offers many advantages, such as not charging their borrowers the standard prepayment penalty and approving first time home-buyers for mortgages with as little as 3.5% down.
However, FHA loans are designed to benefit a particular consumer profile. These rigidly designed, insurance backed loans are extremely conservative and intended for long-term home ownership. Limited closing costs are also no longer a benefit of FHA loans, as of changes made in 2006. With a decision as vital as home-financing, always consider each available option to make the best personal choice.
About the author - Tim Ryan specializes in helping buyers find great deals on Naples real estate. Visit his site to view thousands of Naples homes for sale.
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