FHA Housing Loans - Principles One Needs to Remember

What is FHA loan? Why are FHA housing loans so popular? Aside from food, there is no greater necessity than having shelter. Everyone wants a house. In this life, living from rented room to rented room or rented apartment to rented apartment is quite demoralizing. Everyone needs the security of having their very own house to come home to. When a place is rented, there is not enough sense of security because one does not own the place he or she is living in. Security is especially important especially for the people who have families or a family to take care of. Rent is also a drain on income without a return of investment. Having no home is even worse if one was kicked out through foreclosure and is jobless. The bad economy has done this to many families already. Those people who lost their jobs and as a result got their homes foreclosed have it so bad. It is very traumatic. This is why the FHA housing loan is so popular, because so many people need loans even if their credit is not perfect and even if they have low incomes.

But how does one go through this process exactly. How do the people go through the process of getting the right loan for themselves? Well, first one must know these basic principles and understand what the Federal Housing Authority is. Only then can one successfully obtain one.

The government created the Federal Housing Authority to help the people during the great depression. It was tasked to give those in bad financial situations a chance to get a loan for their own house. And now that the United States economy is starting to get into another bad depression, President Barack Obama created a bailout fund to fuel and strengthen the Authority to perform even better. There are much lower interest rates and easier ways to get accepted for an FHA loan right now because the government understands how a lot of people have bad credit not through any fault of theirs. With conventional loans, having a credit score that does not shine with perfection will get the loan application denied. Also, with conventional loans, having low income will automatically grant one a denial. But this is not true for FHA loans.

One also has to understand that the FHA does not use government tax funds to serve as the mortgage principal. No, the loans are actually from the accounts of banks and private lenders that were approved to give these FHA loans. What the FHA does is that it pays for the loans insurance, thus making sure that the lender will not be at much risk when lending money. The government in short will pay for the loan if the borrower cannot. This is why the lenders can give the loans away at such lenient conditions.

One must also know that FHA housing loans differ from each lender. So one should go shop around for the lender that gives the best deal that fits perfectly in the borrower's situation.

The author is fascinated by things that are simple and minimal. He likes minimalist art, lives a simple lifestyle and writes things that are light and easy to read.

Types Of Mortgage Loans

According to the Bank of Ireland, there are many different homeowner mortgage packages available. These include: a First Time Buyer’s Package, a Trade Up Mortgage, a Switcher Package, a Breakthrough Mortgage, an Equity Release, an Investment Property Package, and a Lifeloan.

The First Time Buyer’s Package offers a 1 year fixed rate of 2.6% APR, then rolls over to a variable rate. Buyers can also receive 20% off the annual insurance premium. The loan must be for a minimum of E150,000 to qualify for the reduced insurance premium. An individual will need documentation of rent payments, a savings account, proof of secure employment, proof of income, a credit history, and spending history.

The Trade Up Mortgage Ireland package has fixed and variable rates. A potential buyer can get a 1 to 5 year fixed rate, which then rolls over to a variable rate. A bonus of E150 furniture removal voucher is included.

The Switcher Package offers an E1000 contribution for legal fees. There is also a 20% discount off of the annual insurance premium. Once again this is only for loans starting at E150,000.

A Breakthrough Mortgage can be acquired if an applicant qualifies for a Local Authority Affordable Housing Scheme. A loan for up to 97% of the purchase price may be obtained and can be financed for up to 35 years. Fixed and variable rates will apply. An applicant is not qualified for this loan if building a house on an Affordable Housing Site.

An Equity Release homeowner mortgage can be repaid in 5 to 30 years. One can borrow from E5, 000 to 90% of the home’s value. Once again 20% off the annual insurance premium is offered for loans of E150,000 or more.

Investment Property loans can be financed for as long as 25 years. An interest only mortgage may be obtained with the borrower paying interest only for the first 1 to 5 years. The loan then reverts to a standard repayment mortgage.

To qualify for a Life Loan, the borrower must be 65 years or older. You can acquire a lump sum of anywhere between E20,000 to E400,000. There is no repayment until the home is sold, the home is vacant for 6 months, or the borrower passes away. If considering a Lifeloan an individual is required to obtain independent welfare, financial and legal advice before applying. Rates on this type of loan are fixed for 15 years, after which a choice of fixed or variable rates applies. Depending on location, a minimum property value applies.

A Home Buy Direct equity loan is free of charge for the first 1 to 5 years. This money can be used for a deposit and to cover up to 30% of the purchase price. Annual income must be less than E60,000 to qualify for this mortgage.