An Elementary Guide: FHA Housing Loans

For those who have not heard of FHA housing loans, read on. This article might help you save so much money every month.

When the real estate market fell, related industries such as construction also started falling. Then the banks and lending companies were next to get into hot water. Millions of Americans were laid off and millions of foreclosures occurred. Now people are still getting transferred as the budget cut backs continue. Not only does one have to deal with growing bills and the uncertainty of their jobs, they also have to worry about the increase in prices of their other living expenses. Almost every middle class family is now in such a tight monthly budget that they no longer spend anything for luxury. It feels like a straight jacket. If one of them were to get sick, then things will go from bad to worse and they will have to worry about how to pay the mortgage. But there is a way in order to relieve or put some breathing space on one’s monthly expenses by refinancing with the FHA or Federal Housing Administration.

The Federal Housing Administration is funded by the U.S. federal government. It has been designed to help low income families as well as those with bad credit to get loans. These people usually get rejected by private banks and lenders. They have nowhere else to turn to for help with their mortgage so the FHA receives them with open arms.

Now the FHA is more needed than ever before. President Barack Obama is injecting a significant part of the Bailout bill into the FHA program. This created even more accessibility and more bargains for people. The interest rates are much lower. The requirements are also much easier. Compare the down payment requirement of traditional loans versus the FHA housing loans: traditional loans require up to ten percent down payment (ten percent of the principal loan) while the FHA requires only around 3.5 percent of the principal loan. Not only that, traditional loans also require the borrower to have so called show money. They basically need to have lots of money stored in their account in order to assure the bank or lender that they are capable of paying for the bill expediently. The FHA does not require that. Also, even if one has low or even no income as of the moment, one can still qualify for this loan. This is quite unheard of in most cases. Banks will just reject anyone applying for a loan while without a job.

There is no more escaping the fact that the economy is truly unstable. There is so much to fear. Those who have a mortgage on their houses are afraid that they might lose their house because they may get demoted, or worse: laid off. The tough economic times cannot help but remind everyone that there is a need to find ways to save money for a rainy day. The suffering brought about by the economic recession and the mortgage crisis in the country is great, and the government is doing the best it can to make the situation lighter for Americans. Through programs like the FHA housing loans, hope is given to citizens to help them achieve the American dream of owning a decent home.