Since I started in the mortgage business back in ‘97 government mortgages have played second fiddle to conventional mortgages.
For all practical purposes it was logical. Conventional mortgages are far easier to process due to less demanding underwriting procedures.
I mean heck, FHA required the appraiser to actually go in the home. What? Forget that, “I wanna drive-by. Or better yet, no appraisal at all.” I say that as I steeple my fingers.
FHA catered to first time home buyers with little down payment and somewhat sketchy credit, like many young people.
The benefit of the program was interest rates were roughly the same as the conventional products.
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.
The financial disaster resulting from the greed on Wall street to poor leadership at the mortgage servicing companies will be felt far and wide for the next ten years. Conventional products are extremely limited now.
What hadn’t changed with the reversal of fortunes was the general FHA underwriting guidelines. This is a great loan for all types of purchases, except investment properties. It is meant for primary residences.
The great thing about FHA, which has always been the case, is the down payment is very low. We currently see about a three percent down requirement by FHA.
Additionally, FHA is pretty easy on credit as well.
This is a boon to some because a lot of people are just creating their credit history or are just getting back on their feet after a good beating.
The economy of the last two years has affected many people’s credit.
The point is FHA is a great option in a time when privately insured mortgages are pulling back the reigns like a frightened Lone Ranger.
Though they may have been poo pooed, FHA loans are now rightly main streem.
Viewed 58 times by 16 viewers
