- Budget your expenditures
- Common tax filing errors
- Credit History and Reports
- Debt consolidation
- Debt counseling is important
- Divorce settlement
- Estate Planning
- FHA Financing
- Home Equity Loans
- Individual retirement accounts
- Mortgage Marketing
- Mortgage Refinancing
- Mortgage tax
- Mutual funds
- Payday loans
- Primary and Secondary Mortgages
- Private Mortgage Insurance Removal
- Student loans
- Tips to take personal loans
- Top 5 Tax Deductions
FHA Financing
One of the most popular ways of getting finance for the first time house buyers, this is a program that has been specially designed and combines together the benefits of various other financial plans. Fully known as Federal Housing Administration, it is a government owned corporation and was established in 1934 under the National Housing Act. The main goal of the corporation was to provide the people with improved housing conditions. FHA also has the goal of providing the people with an adequate financial structure that also provides insurance of mortgages. In the recent times FHA has taken over the role of providing the minority borrowers with efficient and easy finances. FHA has also found out ways to solve the problems of the people with poor credit history along with the borrowers having very little money to afford a house.
Conventional finances VS FHA
The borrowers are often stuck between the various financial programs offered by the different financial companies. Set up by the Federal Government FHA mainly comes with the aim of providing affordable finance to the qualifying borrowers. The main advantage of FHA is that it insures the loan thus providing the borrowers with adequate security. All that the borrower has to do is to pay the insurance premium that amounts to about 1.5% of the loan amount. Monthly premium of about .5% is also to be paid by the borrower. The down payment that has to be made by the borrower is as low as 3% of the amount of loan. No reserves are required to be kept if the money is borrowed from FHA. To be eligible for the loan the borrower is also supposed to provide the corporation with an income proof that describes his eligibility. The guidelines set by FHA are far more convenient and easy to be fulfilled than most of the other financial plans. The guidelines are so efficient that they even provide a bankrupt who was discharged two years ago with a financial plan. While in the same case most of the conventional financial companies will charge the borrower with a very high interest rate. The rates charged by FHA are very low and compete with most of the other financial institutions.
Conclusion
Some of the other traditional loans like Fannie Mae provide the borrowers with loans but at their own risk. The borrowers of these loans are not provided with any kind of government insurance or guarantee. Any traditional loan with LTV i.e. Loan to value ratio comes along with a requirement of primary mortgage insurance of more than 80 percent which has to be paid monthly. The borrower should also provide the company with minimum 5 percent of the loan as the down payment along with a reserve of about two months. All the closing costs are also to be borne by the borrower. Most of the conventional loans come along with very high requirements. The borrower should display a very good credit rating along with satisfactory job and good income.