Why Are FHA Loans In The News Again?
Recently, Federal Housing Administration (FHA) loans have increased in popularity due to structural and legislative changes.
Earlier this year, Congress passed the Stimulus Act of 2008, which temporarily increased FHA loan limits in many regions of the U.S. Because of this legislation, Washoe County has an FHA loan limit of $403,750, Placer County a limit of $580,000 and some surrounding counties are experiencing even higher FHA loan limits.
Structurally, FHA drastically changed its appraisal and fee negotiating policies in an effort to be more competitive. It also made other changes that allowed 1) sellers to finance all of the buyer's costs to close, 2) homeowners to take cash out up to 95% of the home's value, and 3) homeowners to consolidate a 1st and 2nd loan up to 97% of the home's value.
Because of these and other features, FHA loans in many cases are actually a little bit cheaper for the borrower. Also, because FHA loans are federally insured, they tend to trade at a higher premium in the secondary market, and consequently, lenders can often charge a lower rate.
Most importantly, FHA loans are not FICO-score driven. Borrowers can have a lower score than other products and still qualify for a good rate.
These changes have made FHA a valuable option for many Americans, especially first-time home buyers, borrowers with less-than-perfect credit, and borrowers with adjustable rate mortgages. If you are considering a home purchase or refinance, please contact me. Together we will determine if FHA financing aligns with your financial goals. |
