FHA Mortgages are Great Deals Right Now

FHA Mortgages are Great Deals Right Now

If you have been considering a mortgage right now but cannot afford it, have you considered an FHA mortgage? These mortgages are more popular than ever and it may be the perfect option for you.

As of this month, FHA mortgages are some of the best deals in town. According to David Stevens with the Federal Housing Administration, the agency is now the “largest source of home-purchase mortgages in the nation.” With more than $52 billion in purchase loans during the first quarter of this year, FHA mortgages account for about $6 billion more in mortgages than Freddie Mac and Fannie Mae.

This makes the FHA a dominant force in the mortgage industry. This also is the first time the agency has been in this type of position since the 1950s. But why is this significant to you and other homebuyers across the country?

Stevens is not excited about the dominant role the FHA is playing in the housing industry. He said the housing market is “purely on life support” and it is only being sustained by the federal government. A statement from Bloomberg News, a respected financial publication, also said that the FHA’s dominant role is a signal that the mortgage system is very weak right now.

Other agencies like Freddie Mac and Fannie Mae typically sell easier loans than the FHA. These and other lenders also offered lower interest rates than the FHA. However, as of just a couple years ago, the FHA mortgages only comprised about four percent of the entire housing market. For nearly two decades, the number of mortgages that the FHA accounted for did not even reach more than 15 percent.

But don’t let that discourage you. This is actually good news for the average homebuyer. Currently, you can purchase a home through the FHA system for about 3.5 percent down. You’re probably not going to find a rate like that anywhere else. On the down side, it might be difficult to find private mortgage insurance which is typically required for homeowners who put less than 20 percent down on their home. Even when homeowners find private mortgage insurance, it is usually much more expensive because of the small down payment.

Currently, about 12 percent of FHA mortgage loans are past due. This number is just below the percentage of subprime mortgage loans that are past due. The FHA has increased the fee that homebuyers will need to pay upfront in order to get an insured loan through the agency. That number has increased to 2.25 percent of the buyer’s actual loan amount. Buyers are also responsible for insurance and yearly premiums. These precautions are taken to help keep the number of foreclosures down.

If you want to get a home with a very low down payment, now is the time to do it through the FHA. Check out the options and see what it’s like to be a homeowner today.

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