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. The FHA essentially provides a guarantee that a loan will be repaid in the event of borrower 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. When the proposal was passed, the FHA mortgage was just 5.5%. (Here’s a quick aside is for those looking to compare home mortgage loans. In today’s market, current FHA mortgage rates dictate that on a 30 year fixed loan at 6%, you will have to pay 1.875 points. You will also get an interest rate of 6 percent for a 15 year fixed loan, but the points will only be 1.25.) An FHA loan, if you are a borrower, could be your best option, for a couple of reasons. First of all, you don’t have to have perfect credit to qualify for the loan. Because of the sub-prime lending problem, many lenders have become far more strict about who they lend to. Simply having average or slightly better than average credit isn’t enough. Considering other things like your income, debt-to-income ratio, and a few other things, you might still be able to qualify for an FHA loan.

Bankruptcy can also be a factor that holds people back. Depending on other factors, people with bankruptcy can still be considered for a loan. If you are really concerned about whether you can secure financing, and you have poor credit or a bankruptcy on record, then you need to get consumer credit counseling and/or get debt management. Typically, people can get help with making the right steps to reduce their debt-to-income ratio, not to mention potentially improving their credit score.

Typically, FHA loans require a much smaller than typical down payment to get the loan. Some borrowers will see this as an added incentive. Many people can actually benefit from the lower down payment by using the saved money as investment money that will give a return and grow over time.

When all is said and done, the FHA is meant to help responsible and deserving people purchase their own homes. This is one government programs that actually works pretty well.

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Tags: compare home mortgage loans, compare home mortgage rates, compare mortgage loan r, compare mortgage rates, consumer credit consolidation, consumer credit counseling, consumer debt consolidation, credit consolidation, debt consolidation, debt consolidation services

This entry was posted on Wednesday, December 23rd, 2009 at 5:57 am and is filed under Finance. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.