| Right now, FHA mortgage loan is undoubtedly the | | | | adjustable rate mortgage (ARM) loans or a 30-year |
| most popular type of loan in the market. This kind of | | | | fixed term loan. But in the case of ARM loans, lenders |
| attention had not been seen in the past few years but | | | | would prefer a 1-year constant maturity index during |
| due to the recent credit crisis, a lot of new home | | | | which the interest rates are being rescheduled. |
| buyers are flocking to obtain this new loan. | | | | One known advantages of obtaining a FHA loan is |
| The government agency that is tasked to oversee the | | | | that it has the lowest minimum down payment required |
| handing out of this type of loan is the Federal Housing | | | | among all other loan types. It would usually require only |
| Administration. It was created in 1934 in the midst of | | | | 3.5% of the total loan amount as a down payment |
| Great Depression to provide loans to low and middle | | | | compared to other loan types which requires the |
| income bracket families at affordable terms. But it | | | | borrower to shell out 10-15% of the loan amount as a |
| should be known that what the FHA does is to insure | | | | down payment. |
| FHA loan, not lend the loan itself. | | | | It also has low miscellaneous fees, zero pre-payment |
| Most people coming from the low and middle income | | | | penalties and insurance premiums. What is also great |
| brackets are often encouraged to obtain this type of | | | | about is that there are no hidden charges that would |
| loan so that they would be sure that the terms of loan | | | | make you wonder why your mortgage payments are |
| they are going into would not be detrimental to their | | | | going up - unlike conventional loans and other type of |
| advantage. In fact that is one of the main objectives | | | | mortgage loans which usually imposes lots of hidden |
| why the FHA was created: to help these people to be | | | | charges that adds up a lot to the amount being paid |
| able to their dream home without too much cost. | | | | and thus would often result in foreclosures or |
| Another main objective of the FHA is to also protect | | | | defaulting of the loan. |
| the lenders. Most lenders would be keen on lending | | | | In terms of the requirements needed to obtain FHA |
| borrowers FHA housing loan because they are more | | | | mortgage loan, it has lesser requirements needed |
| secure that on the event the loan defaults, they could | | | | unlike conventional loans. But of course they are strict |
| get an insurance claim. | | | | in determining if the borrower is indeed capable of |
| But of course, FHA loans are very beneficial to | | | | paying the loan. This is usually known by presenting |
| borrowers. Because these loans are insured, private | | | | documents like their credit history and proof of income |
| lenders can easily cut down interest rates on these | | | | sources. If the borrower has a bad credit standing, |
| loans unlike with those offering conventional loans that | | | | they could still get a loan but with certain conditions. |
| most of the time is not insured. | | | | Aside from this, FHA loan can also be used in |
| FHA mortgage loan are often being offered as an | | | | acquisition or home improvement projects. |