A FHA mortgage can be an attractive option to many first-time homebuyers, as down-payment requirements for a FHA mortgage can be as low as 3.5 percent. However, you don’t need to be a first-time buyer to take out a FHA mortgage; the only stipulation is that a purchaser may only have one FHA mortgage at a time.

FHA Refinancing
The FHA also allows homeowners’ to obtain a FHA Refinance. A FHA refinance makes it possible to lower your interest rate and your monthly payments. If you already have an FHA mortgage you may qualify for a FHA Streamline Refinance. This allows you to lower the rate on your present mortgage to current market rates without proving income or obtaining an appraisal. Credit is not considered. However, you must have paid your current FHA mortgage on time for the last 12 months. You may also take out cash from the equity in your home to pay off debt, make home improvements on your home or for any other worthwhile purpose. With many Americans currently facing interest rate resets, it's hard to keep up with the mounting monthly mortgage payments.

History of the FHA
The FHA, or the Federal Housing Administration, was established by the government to improve housing conditions for Americans. The government established the FHA mortgage program in 1934 to improve existing housing standards and conditions. Prior to 1934, a down payment was typically 50 percent of the home’s price and payments were stretched out between only 1-5 years

How a FHA Mortgage Works
The FHA does not lend the money; it simply insures that the total mortgage will be paid to the lender if the buyer defaults. It is always the decision of the lender to decide whether or not they will lend the money.

The FHA mortgage program tends to be more forgiving than conventional mortgages in terms of past credit history. A bankruptcy discharged as little as two years ago may not hinder a homebuyer from qualifying for the FHA program.
Typically, FHA mortgages do not require more than a 3.5 percent down payment. Unlike traditional loans, this money may also be a gift to the homebuyer and does not need to be secured as the homebuyer's own money.

Borrowers will also have to pay PMI (private mortgage insurance) on the mortgage. PMI is used to ensure that the total amount of the mortgage will be paid to the lender if the buyer defaults. We have Mortgage Loan Specialists that are trained to explain this requirement to you.

Closing costs on FHA loans are usually between 2-3 percent of the total mortgage amount and are the responsibility of the buyer. However, FHA closing costs can be financed into the total amount of the mortgage and paid off accordingly or the seller may pay them for you if negotiated as such in the purchase agreement. In a refinance transaction the cost is included in the loan or you can pay the cost out of your own pocket.

For More Information on this or any other mortgage loan product, please call one of our Mortgage Loan Specialists or Apply Online Today!