It wasn't all too long back when you couldn't find a mortgage broker or banker wanted to do a FHA insured mortgage. It was Conventional or bust.
It made sense too. FHA is a fully documented loan and there are no corners cut when processing these loans.
A good example was the inside and out appraisal required by FHA. Why would a lender want to chance that when they could avoid it with a conventional mortgage?
The government loan was strong with 1st time home purchasers. Young people, especially, have less than perfect credit and little money to close on a home.
Mortgage brokers had a big selling point in that interest rates for FHA were comparable to the conventional mortgages.
This financial mess we're in started in the '90s. I can remember lenders relaxing conventional underwriting requirements. It go to the point when the lowest down or zero down conventional loan was the way to go.
If I was a betting man I'd say lenders wouldn't mind a do over right about now.
Of course, we all know what happened. The bottom dropped out, 100% financing went away, the sub-prime market is gone, and alt-A products are not even close to what they once were.
What does that leave the consumer. It leaves them one hell of a product in an FHA mortgage to purchase a screaming deal (there might be few of them coming up soon) or to refinance out of a sub-prime.
Most conventional loans require at least 10% down now. FHA does and always has required very light down payment. To be more precise three percent is all that is required.
Additionally, FHA is pretty easy on credit as well.
The light credit requirements are of great help to those with lack of credit or others who hit a rough spot and are in the credit rebuilding process.
Some have taken a good beating in the last year you know.
What I'm getting at here is the government loan is a make sense option when conventional loans are hiding under a proverbial rock.
FHA mortgages, though a former ugly duckling, will be savior to many in the coming years.
It made sense too. FHA is a fully documented loan and there are no corners cut when processing these loans.
A good example was the inside and out appraisal required by FHA. Why would a lender want to chance that when they could avoid it with a conventional mortgage?
The government loan was strong with 1st time home purchasers. Young people, especially, have less than perfect credit and little money to close on a home.
Mortgage brokers had a big selling point in that interest rates for FHA were comparable to the conventional mortgages.
This financial mess we're in started in the '90s. I can remember lenders relaxing conventional underwriting requirements. It go to the point when the lowest down or zero down conventional loan was the way to go.
If I was a betting man I'd say lenders wouldn't mind a do over right about now.
Of course, we all know what happened. The bottom dropped out, 100% financing went away, the sub-prime market is gone, and alt-A products are not even close to what they once were.
What does that leave the consumer. It leaves them one hell of a product in an FHA mortgage to purchase a screaming deal (there might be few of them coming up soon) or to refinance out of a sub-prime.
Most conventional loans require at least 10% down now. FHA does and always has required very light down payment. To be more precise three percent is all that is required.
Additionally, FHA is pretty easy on credit as well.
The light credit requirements are of great help to those with lack of credit or others who hit a rough spot and are in the credit rebuilding process.
Some have taken a good beating in the last year you know.
What I'm getting at here is the government loan is a make sense option when conventional loans are hiding under a proverbial rock.
FHA mortgages, though a former ugly duckling, will be savior to many in the coming years.
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