Why an FHA Mortgage? Why Not an FHA Mortgage?

by Robert Hyder

There are a variety of reasons why securing an FHA mortgage loan is more advantageous than getting a conventional mortgage loan. Why not benefit from the protection that only FHA provides? FHA mortgages have been around since 1934, when Congress decisively concluded that the housing industry was in urgent need of support. Since 1934, FHA has weathered every recession, standing the test of time with strength and durability. By supporting tens of millions of Americans to either buy new homes or avoid foreclosure, an FHA mortgage makes perfect sense for many reasons.

Advantages of an FHA mortgage are:

• Low Down Payment Requirement - Conventional loans require a down payment of 10 to 20% of a homes loan-to-value. FHA loans require a minimal 3.5% down payment. This flexibility eliminates the necessity for a sizeable cash investment.

• Low Interest Rates - The competitive rates offered by FHA mortgages are often times lower than conventional loans because they are insured by the federal government.

• Refinancing Made Easy - FHA offers their FHA Streamline Refinance program to considerably reduce the requirements of underwriting documentation. When compared to the underwriting requirements of a conventional loan, an FHA Streamline Refinance simply makes sense.

• Easy to Qualify - Because the federal government is backing the mortgage, lenders are more agreeable to approve loans with less-stringent guidelines.

• Imperfect Credit - Credit problems, including bankruptcy, are oftentimes not an issue. FHA possesses reduced credit score requirements.

Based on the five basic reasons outlined above, FHA is a wise choice for American homeowners. Because everyone’s financial needs differ, there are several FHA programs from which to choose.

• First Time Homebuyers - With low down payment requirements, first-time homebuyers can contribute as little as 3.5%. In addition, closing costs can be incorporated into the loan size. If a first-time homebuyer would rather have a lower rate, that can be done too by paying some closing costs upfront.

• FHA Streamline Refinance - Since the early 1980s, refinancing an existing FHA mortgage is very straightforward. The underwriting process is quicker and easier because less documentation is required than a conventional loan. As long as the existing mortgage being refinanced is FHA insured, the monthly principal and interest payments are being reduced, all mortgage payments are current and there is no cash back at closing, an FHA Streamline Refinance is the answer.

• Fixer-Upper – A little work never hurt. FHA will allow homeowners to incorporate any and all of the repair costs in one simple loan.

• FHA Reverse Mortgage – If your mortgage is paid in full, or you have minimal payments remaining, why not have your home start to pay you back? Homeowners who have reached the age of 62 can begin leveraging the equity in their home to supplement their income.

• FHA Energy-Efficient Mortgages (EEMs) - FHA has been insuring homes for borrowers who want to make energy-saving improvements to their homes since 1992. Without having to qualify for any additional funds, borrowers can incorporate the cost of the energy-saving improvements directly into the FHA mortgage. FHA recognizes that reducing energy expenses in homes will allow homeowners to pay a higher monthly mortgage payment to cover the excess loan amount that does not need to be qualified for.

• Manufactured Homes & Mobile Homes - Several guideline requirements must be met, however, FHA will gladly provide insurance for both manufactured homes and mobile homes.

The advantages of FHA are time-tested and established. Click here for current FHA mortgage limits. So instead of asking why an FHA mortgage, instead ask, why not an FHA mortgage?