Archive for the ‘Mortgage Meltdown’ Category

Stimulus Bill and FHA

Thursday, February 19th, 2009

The stimulus bill, The American Recovery and Reinvestment Act passed Congress on Friday and is to be signed by President Obama on Tuesday, February 17th.  The Bill does mention the FHA, Freddie Mac and Fannie Mae, the government lending bodies. One of the things the Bill does for these organizations is to raise their lending limits. In 2008, lending limits were raised significantly to allow the FHA to step in and help more people facing foreclosure. Those levels reverted back in 2009. The Bill pushes the limits back to the 2008 level. This means more funds are available for these banks to aid those purchasing homes.

What Do New Limits Do?

There are several things that this new higher limit offers to the mortgage industry. First, by raising the limit, there is more money available to these organizations to purchase loans. This means that when Joe Smith comes to purchase a home, and would like FHA backing on that loan, he can get it because the funds are available to allow for this.

As you know, the FHA allows individuals to get a lower interest rate when borrowing money because it gives the lenders an added insurance that the loan is secure to them. If the borrower with an FHA loan fails to make payment, the property is foreclosed on, but the loan holder can file a claim with the FHA to be reimbursed some money. It works very much like an insurance policy for the lender. Because of the lessoned risk, the lender offers a lower interest rate to the borrower. In short, it aids each body involved.

There are other ways this new higher limit on Freddie Mac and Fannie Mae will. Because it does free up some of this money, more people will qualify in all likelihood for these home loans. With better qualification numbers, more homes can be purchased. People can afford to purchase a home again with the lower interest rate. In turn, more properties that have been sitting on the market or even vacant can be sold. In other words, by raising these limits, the government is aiding in reducing inventory of available housing. This will give cities back their property taxes and aids in boosting other home values throughout the area.

The overall process improves the liquidity of the mortgage market as a whole. Many economists blame at least part of the economic downturn on the failure within the housing market. By restoring some stability here, it could also help to restore some of the value in housing and the markets as a whole.

What Does It Mean To You?

As you consider the Bill and what is included in it, one thing you may want to consider is your own ability to obtain a mortgage and to purchase one of these homes. Not everyone will qualify for a home loan through this program, but far more money is available to help more people to qualify. If you have been considering purchasing a home, but where not sure if you could, or should do so, there benefits of these increased limits makes now an ideal time.

The benefits of having an FHA loan are immense and it should not be overlooked by anyone who is looking for an opportunity to buy a home. Keep in mind that you will still need to meet income and credit qualifications to obtain an FHA loan. If you have been thinking about this type of loan opportunity, take the time to talk to an FHA loan specialist to find out if you qualify for the loan.

Losing A Home As a Short Sale No Better Than Foreclosure

Thursday, September 4th, 2008

Do not make this mistake: Don’t hire someone to help you foreclose on your home or get a short sale for your home. You are wasting your money.

Next, don’t make this mistake: Don’t allow your home to go to short sale or to foreclosure without first contacting an FHA loan representative to find out if there is any help available to you. Most home loan borrowers will find some options to help them avoid losing their home to either of these financially devastating situations.

What happens when you go through a short sale or a foreclosure? What you may not realize is that both have the same end: you will lose your home and you will have long-term damage to your credit record. There is some evidence that both are just as hurtful to your credit, even though many will try to “sell” you on the idea that home foreclosures are worse on your credit than short sales.

What you do not need is to buy information or advice from a third party, especially when you are already having a difficult time with finding money to pay your lender.

Remember This!

If you do go through a foreclosure or you do have a short sale, one thing is for sure: you will be unable to get a new home loan for at least three years that is insured by FHA. Though there are some exceptions, they are few and only in dire situations. The fact is, if you do go this route, you won’t be able to get FHA insured loans later and that will hurt. More so, any time in the future that you apply for a mortgage, even well after those three years, you will need to state that you lost a home to foreclosure or to a short sale.

According to some experts, the only difference in the two in the long term is that in a short sale, you were involved in the process, or “at the table” for what happened. Whereas in a foreclosure, most home owners have little to do with the legal proceedings.

But, I’m Going To Lose My Home!

Those of you who are in rough water right now, hang tight. Contact an FHA loan advisor to find out if there are any current programs in place to help you through this difficult time. Most home owners are able to get the financial help they need. Many will find FHA loan options to keep them in their homes and to avoid all of these costly situations. You do not need to pay someone to short sell your home for you!