FHA Loans

The Department of Housing and Development (HUD), is the federal department responsible for the major housing programs in the United States. One of these programs is the FHA (Federal Housing Administration) loan. The government does not loan the homebuyer the money, they insure the loan, making it less risky for the lender to make this loan. The borrower pays the FHA Mutual Insurance, Mortgage Insurance Premium (MIP).

Not all lenders provide FHA loans, they must be an approved FHA lender.

Unlike the Veteran’s Administration (V.A.) Loans, which are only available to veterans and surviving unmarried spouses of veterans killed in the military, anyone who qualifies can obtain a FHA loan.

One of the advantages of a FHA loan is a low down payment, beginning at 3% for an owner occupant. The maximum loan amount varies throughout the country, depending on which county the property is located.

They buyer is not allowed to have secondary financing for the property, such as a separate loan to cover the down payment. Yet, the buyer can request that the seller pay closing cost up to 6% of the sales price.. After the first mortgage has been acquired, the borrower can apply for second financing.

There is no- prepayment penalty for a FHA loan.

FHA loans is easier to qualify for than a conventional loan, and offes a lower down payment. FHA also offer low interest rates comparable to conventional loans.

For more information on FHA loans contact Schaefer Mortgage Today!

The Federal Housing Administration, or FHA, was established in 1934 as part of President Franklin D. Roosevelt's New Deal. It was a lean time in American history and with the United States mired in the Great Depression, Roosevelt looked to the New Deal as a way to help the country get back on its feet.

In 1965, the FHA became part of the Department of Housing and Urban Development's Office of Housing, allowing even more Americans access to affordable housing. Today, Americans live the dream of home ownership at a rate that is incomparable to that of any other country. And in the decades since its inception, the FHA has become the largest insurer of home mortgages in the world as it continues to make dreams a reality for countless Americans.

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VA Loans

A Veterans Administration (VA) loan can be used to help American servicemen or women and/or their spouses secure financing for a mortgage purchase. You can check with the veterans administration (through its website or through other information exchanges) to find out whether you are eligible given your service history. Only service members who have received honorable discharges and who have served 90 days or more may qualify for VA loans. Bear in mind that the Veterans Administration isn’t actually giving money towards your house or property. It provides insurance to lenders that you will make good on your obligation. If you get a loan for $417,000 or less, the VA will back you (this number may vary depending on the terms of your contract and agreement with the lender).

The advantages of VA loans are manifold. First, you can purchase relatively large properties without a down payment or with a minimum down payment. 100 percent financing is possible. A VA loan should be used as a leverage to reduce your rates and qualify for a larger house that you might otherwise not get through conventional means -- not as a tool to spend beyond your means.

VA loans don’t have to pay for private mortgage insurance, which can free up some funds for relieving consumer debt. also you can prepay your VA loan without penalties. Finally, your seller can take care of closing costs for you up to 4% of the purchase price, further reducing your upfront cash.

So if you are a Veteran who qualifies, it behooves you at least to compare VA loan rates with conventional and FHA loan programs.

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