FHA Mortgage Loans

At present, there is no doubt that the FHA mortgage loans are the most popular and highly appreciated loan type in the market. This kind of trend had never been seen before, but because of the recent economic recession that resulted to credit crisis, many home buyers start to flock to secure this new type of loan.

The Federal Housing Administration is the government bureau that was assigned to supervise and administer this housing program. It was designed in 1934 during the time of frustration to grant loans to families included in low and middle income brackets at terms within their means. But, you should understand that the chief function of FHA is to insure the loan, not provide the loan itself.

If you are included in the low and middle income categories, then you are highly encouraged to apply for FHA mortgage loans. This will ensure that the loan terms you will obtain will benefit you and your family the most. In actual fact, it is one of the chief objectives why the Federal Housing Administration was designed and formulated; to assist individuals like you to achieve your dream house with lower cost and more flexible terms.

Another goal of the FHA is to protect the lending institutions in the market. When you start to shop for FHA mortgage loans, you will notice that most lenders are very keen in granting this loan because it is more secure than other mortgages. Thus, when you fail to reimburse the monthly payments, they can exercise their insurance claim.

Definitely, FHA mortgage loans are very advantageous to borrowers like you. Because these loans are secured, insured, and protected, private lenders can effortlessly bring down the rates of interest unlike when they offer regular loans, which are not insured for most instances. The FHA loan will be presented frequently as an adjustable rate mortgage (ARM) loans or a thirty year fixed term home loan. Although for ARM loans, lenders would like to go for one year constant maturity index at some stage in which the interest rates are being rearranged.

You will not be worried about meeting the required down payment, since one of the highly appreciated benefits of this loan is that is has the lowest minimum down payment among other types of home loans. Normally, you can shell out a down payment amounting to 3.5% of the total money you loaned compared to other types of loans, which call for a down payment of about 10-15% of the loan amount.

The Federal Housing mortgage loans have zero pre-payment penalties, insurance premiums, and low miscellaneous charges. There are no hidden fees that would astonish you why your mortgage payments go up. This is very different from conventional home loans that impose many hidden charges that could result in foreclosures because of payment defaults.

You can easily apply and secure FHA mortgage loans because they have fewer requirements. However, they are very strict in checking if you can really pay the loan. You will have to present some documentation like you proof of income as well as your credit history.