FHA Mortgage Rates
Why You Need To Know
What An FHA Loan IsThe FHA loan is a federal assistance mortgage insured by the Federal Housing Administration. FHA mortgage rates were originally designed to help lower income Americans borrow money for the purchase of a home. The intent was to provide lenders with insurance where the insurance premiums were paid for by the borrowers. FHA primarily serves people who cannot afford a conventional down payment or otherwise do not qualify for PMI (Private Mortgage Insurance) insurance. I heard a radio advertisement indicating that the lending limit on FHA loans was raised to over $700,000. The commercial did not indicate the area that limit would apply. The assumption by the listener is that it will apply to me. Reality is it will not apply to the greater Sacramento area. The bill that did pass through Congress and was signed by the President raised the limit to 125% of the median sales price in the area to a maximum of over $700,000. These temporary limits will remain in effect until the end of 2008. If find these types of advertisements a disservice to the public and in part the reason for the problems currently facing the real estate and lending industries. That said, this is a great opportunity for first time home buyers!
And What An FHA Loan Isn’tFHA insures the lending institution against loss of principal in case the borrower fails to meet the terms and conditions of the mortgage. The borrower pays an insurance premium for the lender’s protection and receives two benefits: a thorough appraisal by an FHA approved appraiser and a lower interest rate on the mortgage than the lender might have otherwise charge for the loan.There are FHA mortgage rates and programs that offer fixed rate mortgages for 15 or 30 years, as well as adjustable rate mortgages tied to an index; also available is financing for adding energy-efficient features to new or existing homes. The most popular FHA loan has a minimum cash investment from the borrower of 3% of the purchase price; but allows 100% of the money needed at closing to be a gift from a close relative, friend, or grant money. FHA lending guidelines are not as strict as those for conventional loans backed by Fanny Mae and Freddie Mac. One advantage of an FHA loan is it can be assumed but a new qualified owner who takes over the monthly payments saving the fees associated with acquiring a new loan. For up to the latest changes to FHA mortgage rates, limits and qualification criteria contact your trusted mortgage broker and my team member Evangeline Scott who is a Certified Mortgage Planner at Summit Funding at
Team Scott
of (916) 496-0160. Contact me today so we can develop a game plan to get you on the road to owning your first home. If you have any questions regarding the real estate market and what is real and what is hype call me.
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