FHA? I don't understand it!

Welcome to Spring of 2008! Did you know June is National Homeowners Month? This year's theme is "Back to Basics".

From the HUD.gov website: This year's theme - "Back to Basics" - is designed to underscore the importance of having strong, common-sense fundamentals as a way to maintain a sustainable housing market. Many of those basics were ignored in the lead-up to the housing bubble. HUD's Federal Housing Administration is at the center of the Administration's efforts to help qualified homeowners refinance into safer, more affordable mortgage products.

Despite many news stories that suggest that buyers must put down at least 20% as a down payment in order to buy a home, there are many loan programs that allow a buyer to put a lower down payment, or even to refinance an existing loan with a fairly high loan-to-value ratio.

One of the oldest, most stable loan programs is the FHA loan program. FHA stands for Federal Housing Administration and as you can glean from the name of the program, it is a government-backed loan program, administered by HUD.

You might not realize that the FHA (Federal Housing Administration) has insured over 34 million home mortgages, and has been in existence since 1934.

FHA loans are for ANYBODY -- not just first time buyers. FHA loans can be used on single family houses, certain condominiums, duplexes, 3-plexes and 4-plexes. If duplex, 3-plex or 4-plex, the borrower must live in one of the units, and the loan limits for these kinds of properties are higher than for single family homes.

I have started collecting FHA tips from several lenders I work with. Here are a few that I think many of you may find helpful and interesting.

** The cost for the seller to accept an offer with an FHA loan is now only the tax service fee which is about $85. It previously cost $100 - $200 in years past.

** FHA requires only 3% down. Some of the loans above the standard FHA loan limits (temporary limits by Congress) do require 5%, but some lenders offer a loan program only requiring 3% down for the temporary limits too.

** FHA does allow seller paid closing costs. The minimum contribution for funds to close by the borrower is 3% and the funds can be gifted.

Buyers, or homeowners wanting to refinance, can apply for an FHA loan through a local mortgage lender. Not all mortgage lenders can or will do an FHA loan, so don't hesitate to ask for referrals. Take the time to explore your financing options before you go home hunting, it can well pay off in valuable information.

If you would like to learn more about an FHA loan, or apply for one, simply CLICK HERE to contact me today.

Kyle