| You can't turn on the TV these days without seeing a | | | | financing" before. The FHA program is an example of |
| news story about the U.S. economy in general and the | | | | this. By having government insurance in their favor, |
| housing market in particular. Starting in 2007, we began | | | | private lenders are more willing to offer mortgages to |
| to see record numbers of home foreclosures, a trend | | | | borrowers they normally wouldn't qualify (due to credit |
| that continued into 2008 (and one that shows no sign | | | | problems or other qualification issues). The lender is |
| of slowing). | | | | assured of getting their money back on the loan, even |
| But for many homeowners, help is on the horizon. And | | | | if the homeowner defaults and stops making |
| it comes in the form of FHA refinance loans. Let's take | | | | payments. That's what the FHA insurance does. |
| a closer look at this new program and what it | | | | The Refinancing Angle |
| promises to do. | | | | Traditionally, the FHA program was focused on helping |
| Housing and Economic Recovery Act | | | | buyers in the purchase of a home. But as a result of |
| The recently passed Housing and Economic Recovery | | | | the aforementioned Housing and Economic Recovery |
| Act of 2008 will help "at least 400,000 families" who | | | | Act, the program is being opened up to homeowners |
| are struggling with their mortgage payments and facing | | | | who want to refinance. According to the HUD website, |
| foreclosure. It will do this by providing FHA-insured | | | | "an estimated 400,000 borrowers in danger of losing |
| refinance loans to switch the homeowners from | | | | their homes will be able to refinance into more |
| high-rate ARM loans to lower fixed-rate mortgages. | | | | affordable government-insured mortgages." The |
| For those accepted into the program, the end result will | | | | program is slated to begin in October of 2008. To find |
| be a lower monthly payment and more desirable fixed | | | | out if you are eligible, visit the HUD website or refer to |
| rate that will no longer adjust / increase. | | | | the Home Buying Institute resources mentioned at the |
| History of the FHA | | | | end of this article. |
| The Federal Housing Administration was created in | | | | Getting Away from ARM Loans |
| 1934, during the Great Depression, to make home | | | | The goal of this new program is two-fold. It is designed |
| financing available to a greater number of Americans. | | | | to help struggling homeowners who have |
| The FHA does not actually make home loans to | | | | adjustable-rate mortgages (ARMs) convert to fixed |
| consumers. Instead, they insure certain loans made by | | | | rates. It's also designed to lower their mortgage rates |
| private lending institutions. | | | | in the process. Lower rates and less uncertainty -- a |
| You've probably heard the term "government-backed | | | | double win. |