| Foreclosures rates are on the rise on a massive scale | | | | borrower's credit history, he or she will not be |
| because of the 2007 economic downturn. American | | | | automatically disqualified. However, the bankruptcy |
| homeowners are in dire need of some budget | | | | should at least be two years old assuring that the |
| cutbacks. So many have taken the beating when | | | | borrower has had enough time to recover. This makes |
| salaries were reduced and many have lost their jobs | | | | it more accessible to people who need loans but |
| when a string of companies started shutting down | | | | cannot get traditional ones. Another thing that makes |
| their operations especially those related to finance, real | | | | this kind of federally insured loan is that they do not |
| estate, and construction. Other industries have also | | | | look at one's current credit score as the main basis for |
| done badly which is why the amount of layoffs were | | | | comparison. Instead, one's whole scorecard will be |
| devastating. This leads to the stagnation of | | | | examined to see if you are worthy of being given a |
| construction that in a vicious cycle is threatening the | | | | loan. Thus, people who have been victims of the |
| banks once again. In the midst of all these economic | | | | current economic downtrend are able to get a loan |
| worries, the Obama administration has moved more | | | | despite their not so good score. |
| funding to reinforcing the efforts of FHA or Federal | | | | The loan also has low interest rates which is of course |
| Housing Administration whose main goal is to help | | | | what everyone wants. Those traditional loans have |
| people be able to afford home loans. So what exactly | | | | such high interest rates which is the leading cause for |
| are the loans that they give out? What is FHA loan? | | | | why the homeowners are really struggling with their |
| The first question that most people have is "are these | | | | payments. Again, since the loans are already insured, |
| loans government loans?" The answer to this is no, not | | | | the lender does not have to worry much about low |
| really. The FHA, as created during the great | | | | interest rates. Also, the down payment of an FHA |
| depression, was meant to make people buy more | | | | home loan is very low as compared to other loans. |
| houses by making loans more available and accessible | | | | This |
| even to those cannot get traditional loans because of | | | | Lower interest rates. Normal subprime lenders charge |
| their undesirable credit scores or income. What the | | | | higher interest rates to make up for the compounded |
| FHA did was to pay the insurance of certain private | | | | risk of the loan. Because FHA insures these loans, |
| lender's loan offers. By paying the insurance, they | | | | they only incur lower risks for lenders, thus the lower |
| were able to lower the risk for the lenders and thus | | | | interest rates. |
| the lenders were free to give out more loans. | | | | So what is FHA loan? It is an affordable federally |
| Therefore, an FHA housing loan is not a government | | | | insured housing loan that can be acquired rather easily |
| loan, it is just a government insured loan. | | | | because the requirements are lower than traditional |
| Because of this, the borrower is given distinct | | | | mortgages. |
| advantages. Even if there is a bankruptcy on the | | | | |