FHA Home Loans Pave the Way for New Homebuyers by Bryan Dornan
By
Loans backed by the Federal Housing Administration are poised to make up a bigger share of the mortgage market than they have in many years. The FHA predicts it will insure nearly $224 billion in single-family home mortgages during 2008, up from about $60 billion in 2007, according to agency projections.
“They are becoming a critical component in home financing market,” says Frank Watters, chief economist at Natiowide Mortgage Loans.
The FHA offers insurance on mortgage loans that FHA-approved lenders make to borrowers in the United States. The FHA’s original intent was to spur homeownership in the wake of the Great Depression. The agency is now the largest mortgage insurer in the world, having guaranteed 34 million properties since its inception.
For decades, FHA Home Loans were the mortgage of choice for many first time home-buyers and borrowers with substandard credit who could not secure conventional mortgages. But these mortgages had lost popularity as borrowers with poor credit moved towards subprime loans. Many subprime loans have low initial “teaser” rates, making payments more affordable — at least until the rate adjusts later in the loan’s term.
However, the subprime market meltdown and stricter lending standards have caused many mortgage shoppers and Realtors to give FHA-insured loans a 2nd look.
2 Comments
May 5th, 2008 at 9:18 am
Does FHA always require mortgage insurance?
What about if the borrower is refinancing below 80% loan to value?
January 13th, 2009 at 12:47 am
We currently have a 12% interest rate on our mortgage. We took out a subprime mortgage a few years back, but are interested in our options to refinance for lower payments with a fixed rate mortgage. Our present loan is insterst only which is not enabling us to pay anything off with each payment. Please help us shop for a mortgage loan with a good interest rate. Thanks