With sub prime mortgages a thing of the past FHA loan origination’s have blossomed. FHA loans now account for 23 percent of new mortgages. The surge in FHA loan origination’s is credited to the government tax credit of up to $8,000 for first time homebuyers and underwriting guidelines requiring just 3 percent down in most cases.
FHA Loan Rates:
FHA loan rates are driven by the same yield, the 10 year treasury yield, that drives conforming Fannie and Freddie insured mortgages. Currently 30 year fixed FHA loan rates are as low as 4.875 percent. Normal points and fees apply. Also FHA loans require mortgage insurance making them more costly then Fannie and Freddie insured mortgages.
FHA Loan Refinance
FHA is unique in that a FHA to FHA refinance can be done without documentation. This refinance transaction is called a streamline.
80/17 FHA Loans
FHA has a program called the 203k in which the 1st and 2nd mortgage are both 30 year fixed loans with the same interest rate. The combined loan to value of this loan is 97 percent with 80 percent on one loan and 17 percent on the other.
FHA Loans for Homes in Need of Renovation
As foreclosures mount many buyers seeking bargains find themselves buying a home in need of renovation. FHA has a program that allows financing $35,000 above the loan amount for repair work at the same interest rate. For this program you need a licensed contractor to give you a bid for the work to be done.You can delay payments for 3 months, live at a different location until the repair work is complete.
FHA Loans Stabilizing Some Areas Median Home Values
FHA loans are credited with stabilizing home prices in some areas. Buyers not willing to part with a large chunk of cash are getting into homes with little initial investment. Since the pickup in FHA loan origination home values have stabilized as evident in recent Case-Shiller reports.