| The notion of buying your first home for you and your | | | | institutions, or the credit union. The great thing about this |
| family is inevitably exciting. But you have to understand | | | | program is that not more than 3 to 5% down payment |
| that with all the excitement, you still have to remember | | | | is required. There are certain points associated with |
| that this still comes with responsible decision-making - | | | | the mortgages and these are then paid to the lenders, |
| and more importantly, a lot of budgeting. In fact, rarely | | | | so that the interest rates of the mortgages can be |
| would you find a first-time homeowner who can dish | | | | lowered. |
| out hard cash when purchasing a house. Most of the | | | | The borrowers, however, have to pay what is known |
| time, this would be done through mortgages - FHA | | | | as private mortgage insurance or PMI on their |
| mortgages, to be exact. | | | | mortgages. This amount ensures that the total |
| But what exactly is this FHA mortgage? The thing that | | | | mortgage will still be paid off in case the buyer |
| makes this type of mortgage very attractive is the | | | | defaults. For the most part, the PMI will be implemented |
| fact that your down payment can be very low - even | | | | only when 20% of the whole mortgage amount has |
| as low as just 3% of the whole mortgage. And the | | | | already been paid. |
| only stipulation that comes with this type is that you | | | | To qualify for this mortgage, your credit history should |
| can only have one FHA mortgage at a single time. | | | | be decent - which means your report should show |
| So, how does this work? The Federal Housing | | | | you as capable and fit to pay off debts in a very |
| Administration, or the FHA, was conceptualized and | | | | timely manner. Apart from that, you should also have |
| developed by the US government, for the sole | | | | financial records showing that your monthly mortgage |
| purpose of improving housing conditions for Americans | | | | payment is not more than 29% of your monthly |
| all over the state. The FHA does not really lend any | | | | income. |
| money. What it does is that it insures that the | | | | These are just the fundamentals you need to know |
| complete mortgage will still be paid even if the buyer | | | | about FHA mortgages. By being informed about such |
| choose to commit the unfortunate act of defaulting. | | | | fundamentals, you can certainly better your chances |
| The decision to lend out the money still lies in the hands | | | | of qualifying for this type of mortgage. |
| of private lenders - the bank, savings and loan | | | | |