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Purchase Market Helped by FHA Mortgage Flexibility

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The home financing industry has been aided significantly by government loans like FHA. First time house buyers have relied on FHA financing for several decades because of minimal down-payment and credit standards. With interest rates ticking upward and home sales stagnant many mortgage professionals are beginning to wonder if the housing recovery is over. The fact is that most conventional and government finance sources on the secondary market have tightened their lending guidelines. Conforming lenders are seeking higher credit scores and more equity for people refinancing in most cases.  We see the trend steering towards a smaller pool of qualified borrowers.

Will the Purchase Market Heat Up Again in 2014?

Home buying is more aggressive with credit for first time house buyers that seek FHA mortgage products. Of course borrowers will have to pay the upfront costs as well as monthly mortgage insurance. But many new home buyers simply see the down-payment and mortgage insurance as a trade-off to become a homeowner while house prices are still relatively low. The idea is for these borrowers buying real estate insured by FHA to earn equity quick when the market surges so they can refinance into a home loan that does not require mortgage insurance. Will that happen soon? Nobody knows but it appears the Federal Reserve will keep the rates artificially low at least through 2016. Read FHA Home Loans Programs Safe

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