Since I started in the mortgage business back in '97 government mortgages have played second fiddle to conventional mortgages.
It made sense too. FHA is a fully documented loan and there are no corners cut when processing these loans.
A good example was the inside and out appraisal required by FHA. Why would a lender want to chance that when they could avoid it with a conventional mortgage?
FHA catered to first time home buyers with little down payment and somewhat sketchy credit, like many young people.
First timers could get, with FHA, a highly competitive interest rate loan. It even had lower down payment requirements than the conventional loan.
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.
I imagine the mortgage companies would like a redo at this point.
Of course, we all know what happened. The bottom dropped out, 100% financing went away, the sub-prime market is gone, and alt-A products are not even close to what they once were.
With all these wonderous mortgages biting the dust we still have government loans to fall back on. And they are just as good as ever for the purchase or refinance of residential 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.
Some have taken a good beating in the last year you know.
What I'm getting at here is the government loan is a make sense option when conventional loans are hiding under a proverbial rock.
The government loans keep chugging along and offer a great benefit.
It made sense too. FHA is a fully documented loan and there are no corners cut when processing these loans.
A good example was the inside and out appraisal required by FHA. Why would a lender want to chance that when they could avoid it with a conventional mortgage?
FHA catered to first time home buyers with little down payment and somewhat sketchy credit, like many young people.
First timers could get, with FHA, a highly competitive interest rate loan. It even had lower down payment requirements than the conventional loan.
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.
I imagine the mortgage companies would like a redo at this point.
Of course, we all know what happened. The bottom dropped out, 100% financing went away, the sub-prime market is gone, and alt-A products are not even close to what they once were.
With all these wonderous mortgages biting the dust we still have government loans to fall back on. And they are just as good as ever for the purchase or refinance of residential 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.
Some have taken a good beating in the last year you know.
What I'm getting at here is the government loan is a make sense option when conventional loans are hiding under a proverbial rock.
The government loans keep chugging along and offer a great benefit.
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Discover your savings if you refinance your Austin home with a mortgage. Clickaway my friends.
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