Home Loans:
Federal Housing
Administration Loans
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FHA 101
James Monahan
What is FHA
FHA or Federal Housing Administration is a branch of HUD or
Housing and Urban Development that works through local mortgage
lending agencies to give Federal mortgage and loan insurance for
those who wish to own a home or do home improvement projects.
It is a government-own corporation that was established under the
National Housing Act of 1934 to promote better housing standards
and conditions.
FHA aids first-time buyers and those who would probably not be
able to pay the required down payment for conventional loans
through insuring mortgage to private lenders. It also ensures
loans for buying mobile or manufactured homes.
It also assists in providing low-cost houses for rent through
insuring loans land developers and builders who make or improve
apartments and other multifamily housing developments.
Generally, FHA aims to make available sufficient home financing
system by providing insurance mortgages and to make the mortgage
market as stable as possible.
FHA helped mortgage insurance products that started to make the
nation's rate of home ownership to spike to an all time high of
66% on the third quarter of 1997. One of these products is the
long time amortizing loan.
The following are the programs conducted by FHA to achieve its
goals:
a. Streamline refinancing for FHA mortgages
b. Down payment gifts
This is one very popular financing aspect from FHA. It allows you
to receive your down payment as a gift, as long as it's from a
relative.
c. FHA bridal registry account
d. Bankruptcy and foreclosure
FHA must have the most lenient rules when it comes to bankruptcy,
but it is still required that an applicant has a valid reason and
has his credit re-established.
e. Refunds on FHA loans
If one ever paid off a home loan supported by FHA, one may have
money owed to that person.
f. Single family mortgage insurance
Aims to provide mortgage insurance for a person to buy or
refinance a principal residence.
g. Single family rehab mortgage program
It provides mortgage insurance for a person to refinance or buy a
principal residence or an investment property and to accomplish
improvement of an existing 1 to 4 unit home.
h. Property improvement loan insurance.
Another loan program from FHA which includes the 203(k) rehab
program.
i. Multi family mortgage insurance program
It is an insurance program for an existing 5 or more units home.
FHA keeps up with the government's goal to keep on reinventing,
automating, and streamlining the process of home ownership. This
is made evident by the following data:
1. Several single family mortgage insurance programs, i.e., the
section 203 (k) purchase rehabilitation project that has been
greatly improved. It was given so much attention that trainings
were conducted for realtors, lenders, and non-profit
organizations country-wide to make the program work for them as
well as with the consumers.
2. FHA relies on automation since it provides equal treatment for
all the applicants and quicker processing.
3. With the manufactured housing area, FHA ensured that all
manufactured homes comply with the required improved safety
standards.
4. FHA utilizes the Internet in executing its business
procedures. FHA Connection is made available online to enable
lenders to submit information regarding their insurance
endorsements. Through the HUD/FHA homepage, homeowners can easily
access data concerning premium refunds on mortgage insurance.
James Monahan is the owner and Senior Editor of
http://www.FHACentral.com and
writes expert articles about FHA
Loans.
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