What is FHA Mortgage Insurance?
FHA Common Question #15
FHA mortgages are insured to protect lenders in case of a default on the FHA loan. An FHA mortgage is advantageous to the borrower because of the reduced cash investment needed to close on a home. The FHA mortgage is possible in part because the FHA is funded solely from income it creates itself.
The FHA is not funded by tax dollars, but from the revenue generated by FHA mortgage insurance. This cost is borne by the home buyer, but the insurance cost ends approximately five years later, or when the FHA mortgage balance is seventy-eight percent of the property value, whichever occurs last. Other home loans have more stringent requirements, but FHA mortgages have flexible payment schedules and more inclusive definitions of monthly income.
All of this may be quite confusing to a first-time home buyer. If you aren't sure why an FHA loan may be right for you, ask your lender to do a side-by-side comparison between the FHA mortgage and the current non-FHA versions. It will soon become apparent which is the best value for your money, especially if you don't have a lot to invest in a down payment.
FHA Loan Articles
Read About Mortgage News, FHA Updates, and Guidelines
Your debt to income ratio is a very important factor in the FHA loan application process. Do you wonder how existing debts affect your chances? What about debts that are scheduled to be paid off at some point in the near future?
It can be easy to get confused over the difference between lender requirements and FHA refinance loan standards--did you know that FHA loan rules for Streamline Refinancing permit the lender to require things the FHA rules don’t insist upon?
What are the steps toward completing your purchase of a home using an FHA mortgage? It’s a common question and one first-time home buyers might be afraid to ask, not wanting to seem ignorant of the process.
When you find a home to buy with your FHA home loan, before that loan can be approved the property must first be appraised--this portion of the FHA home loan process is often misunderstood. Do you know what the FHA appraisal is designed to do?
FHA loan rules for the single-family loan program are designed for owner-occupiers, but depending on circumstances a borrower may be approved by a participating lender to buy another home--usually in response to a pragmatic need like a larger family or job requirements.Source: www.fha.com