What’s Happening with FHA Mortgages Today?

Providing more loans than any other organization, the FHA was established in 1934 and has given loans to over 35 million borrowers. Understand, though, the FHA does not actually fund your loan, it simply insures it. FHA makes it safer for lenders to grant loans because they know that the FHA will pay off whatever is left should you default.

In 2006, President Bush was able to convince Congress to pass a modernization proposal for the FHA that made it possible for families in need to purchase homes. At the time, the FHA mortgage rate was only 5.5 percent. (Here’s a quick aside is for those looking to compare home mortgage loans. In today’s market, current FHA mortgage rates dictate that the interest rate is 6% for a 30-year fixed loan with 1.875 points. You will only have 1.25 points for a 15 year fixed loan, but the interest rate will also be 6 percent.) As a borrower, there are a couple reasons why an FHA loan could be your best option. First, to qualify for the loan you do not need to have high quality credit. Lenders have become far more selective about who they lend to, thanks to the sub-prime loan fallout. Average and even above average credit just won’t be enough to get a loan now. However, you could still get an FHA loan because other things are considered, like income and debt-to-income ratios.

Bankruptcy can be one other thing that impairs people. People with previous bankruptcy can still be considered for FHA loans, after other things are also considered. If you’re really concerned about whether you will get financed or not, and you have bad credit or a bankruptcy on record, then you should try credit consolidation and/or get debt management. Usually people are able to improve their credit rating, as well as take the right steps to improve their debt-to-income ratio.

Typically, FHA loans require a much smaller than typical down payment to get the loan. This can also be a huge perk for some borrowers. When a larger down payment is possible, it will often make more sense to use the remaining money from the down payment as capital investment to help it grow over time.

The FHA is designed to help people, who are deserving and responsible, buy their own homes. This is one of those U.S. government programs that actually does what it’s intended to do.

Deal with Your Debt: The Right Way to Manage Your Bills and Pay Off What You Owe

Most people carry debt for most of their adult lives. Yet, most books on debt focus mainly on how to pay it all off, and live forever without it. Too often, following that advice leads only to failure. People either give up, or pay off the wrong kinds of debt. They strand themselves with too little flexibility to survive a financial crisis — and land in bankruptcy court. They neglect saving for retirement, homes, or college, and end up poorer than they might have been. For most people, it’s more realistic — and smarter — to control and manage debt effectively, rather than eliminating it completely. Debt Smart shows how. Award-winning personal finance columnist Liz Weston explains the rules and explodes the myths surrounding debt. Discover the crucial role debt can play in a portfolio, identifying debts that actually contribute to wealth and flexibility, while avoiding or eliminating “toxic” debts. Weston presents effective strategies for evaluating, monitoring, and paying every form of debt, from credit cards and mortgages to student and auto loans. She offers practical guidelines for how much debt one should take on.Find realistic (and often surprising) guidance on everything from home equity loans and 401K borrowing to small business loans.

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