Is the federal government doing anything about the U.S. economic situation? How will those with bad credit get a new mortgage loan? What is the FHA Mortgage Program?
We all know that the economy is in tatters. Even as it starts to recover quietly from the loan mortgage burst that destroyed everything along with Wall Street, people still have a lot of problems especially regarding their homes. Millions of foreclosures have already happened and Millions more are poised to happen. But the government is trying to stop this by creating a stimulus program for loan modification. Also, for those who need to get a home mortgage but are in dire straights in terms of their financial situation there is the FHA Mortgage Program.
The FHA or Federal Housing Administration is a federal funded entity that aims to help Americans who need to get housing. It provides loans to such financial challenged people. The guidelines of the loan give borrowers great benefits because of the lenient qualifications. Also, one of the best things about approved mortgages is that it is fully assumable; such security is valuable to any family especially during these times when interest rates are reaching for the sky.
The US Federal Housing Authority gives loans not only to those who need to buy homes but also to those who need refinancing for their old home mortgage. It also helps homeowners to change their ARM into a lowered rate refinance that makes sure there is a fixed set for every monthly payment up to the point when the all mortgage payments are completed. If one refinances this way, they can rest assured that the rates they can cash out of will be between ninety-five to eighty-five percent of the loan value. Another great thing is that lenders will require a smaller down payment, just two to five percent of the total loan value is required.
Each kind of approved mortgage by the authority is specialized and should be applied for independently. The ability to handle the payments in light of one’s monthly expenses is what is focused when determining qualification. Unlike traditional loans, credit scores are just secondary considerations that do not have as much impact. The important thing on how to qualify is to compute one’s DTIR or debt to income ratio. These two conditions are vital for a borrower to get into the program: first of all, one’s expenses in his or her monthly mortgage payments should not be more than twenty-nine percent of one’s income (gross); secondly the total debts of the applying borrower should not be more than forty-one percent of his or her monthly income.
The FHA mortgage program can be gotten by those living in both urban as well as in rural locations. They are not actually the ones that give out the money for the loans. Banks and lending institutions still provide the financing. The Federal Housing Federation just pays for the insurance that covers the loan and this is why lenders are able to provide such lenient requirements. This might just be the solution to your financing dilemma.