FHA Mortgage Update for Refinance & Home Loans

If you haven’t heard, Federal Housing Administration continues to provide the best FHA loans for refinance mortgages and home purchasing.  After replacing most of the loan products in 2006 for subprime lending, FHA continues to push the envelope for home financing because it is one of the few mortgage products that isn’t focused primarily on credit scores.  Then HUD introduced FHASecure refinancing to help the millions of borrowers who were struggling to refinance their adjustable rate mortgage.  Recently HUD rolled out a widely publicized FHA refinance loans, Hope for Homeowners program in an effort to provide mortgage relief with principal reductions and short refinancing for borrowers who were currently delinquent on their mortgage and did not qualify for the regular FHA mortgage product. 

Presently, FHA insures almost one third of the country’s mortgage loans.  Until recently, FHA loans did not have nearly the market share, at least not the in the last forty years. Beginning January 1, 2009, FHA will insure single-family home mortgages up to $271,050 in low cost areas and up to a maximum of $625,500 in high cost areas. Just last February, Congress passed the 2008 Stimulus Package that temporarily increased the FHA mortgage loan limit to $729,750 through December 31, 2008. The new $625,500 maximum, however, represents a significant increase over the $362,790 limit that was in effect prior to the Stimulus Package.  Higher FHA loan limits do not cost the government any money because the FHA Insurance Fund is fully supported by premiums paid by borrowers who receive FHA-insured mortgage loans. 

Increased FHA mortgage limits do not cost the government any money because the FHA Insurance Fund is supported completely by premiums paid by borrowers who receive FHA-insured mortgage loans.  The Housing and Economic Recovery Act announced that the national conforming mortgage loan limit to a house price index chosen by the new FHFA. For 2009, the national conforming limit will remain at the current level of $417,000. This Financing Act says that the new FHA loan limits will be set at 115 % of the median house price in a given area, as determined by HUD, but cannot be lower than 65 % of the conforming loan limit. Also, the FHA mortgage limit cannot exceed 150 % of the national conforming loan limit.  FHA mortgage rates have reached record low recently with interest rates declining to 5% on fixed rate mortgages on thirty year terms.