Many people dream of owning their own homes but only very few are able to pay cash for them. This is why FHA mortgages are one of the popular methods to find a source for consumer credit. People who could not otherwise afford to own a house become homeowners with the help of FHA mortgage insurance programs.
FHA is the Federal Housing Administration. As part of the U.S. Department of Housing and Urban Development (HUD), one of the chief purposes of the FHA is to help people obtain financing for their homes.
How FHA Mortgage Insurance Works
As stated earlier, FHA mortgage is a way for homebuyers to obtain financing for their homes. All home purchases require buyers to make a certain set percentage of the total purchase price, called the down payment. What the FHA mortgage insurance does therefore is to allow a homebuyer to make a modest down payment and obtain a mortgage for the balance of the purchase price.
The mortgage loan itself is made by a bank, a savings and loan association, a mortgage company, a credit union, or any other lender. For it to become an FHA mortgage loan, the lender would have to be approved by the Federal Housing Administration. FHA (HUD0 insures then insures the loan and pays the lender if the borrower defaults on the mortgage. The protection offered by FHA mortgages to lenders allows them to be more liberal with their terms than the prospective homeowner might otherwise obtain.
Who can get an FHA Mortgage?
The good thing about FHA mortgages is that almost anyone can get it. So if you have a satisfactory credit record, enough cash to close the loan and sufficient steady income to make monthly mortgage payments without difficulty, then you'll have no trouble getting approved for an FHA mortgage. As a rule of thumb, only people who will reside in the property are eligible for FHA-insured mortgages.
There is no upper age limit set by HUD for the borrower. Nor is there a certain income level that the borrower must achieve in order to buy a home at a certain price. And although income is certainly an important factor, it is simply one of the several determining factors which are used by the HUD to find whether the borrower will be able to repay the mortgage.
Types of FHA Mortgages
There are several types of mortgages that FHA insures. These include:
Debit and Credit - Learning Accounting Basics
The terms ‘debit’ and ‘credit’ can be confusing when learning accounting for the first time but why is that? If you go to the bank and put money into your account then teller will say, “I am crediting your account with X amount of dollars,” on the other hand take money out of your account and the teller will say, “I am debiting your account X amount of dollars.” Plus with debit machines everywhere and everyone carrying at least one credit card these two terms take on a whole new meaning.
How to Refinance Your Home
There are several reasons why you should consider a refinance mortgage on your home loan. When you refinance your home, you can cut your monthly mortgage payments. In addition, you can tap into your equity, or your home value, in order to pay off other loans and credit cards. This in turn helps you to deduct your mortgage interest from your taxes.
Is A Home Equity Credit Line Right for You?
Using credit lines against the equity of your home are one source of consumer credit that is fast gaining popularity. Home equity is a valuable asset which both lenders and borrowers can benefit from and as such, lenders are offering home equity credit lines in a variety of ways.
