FHA Loans aren't just for first time home buyers.
"I can't get a FHA loan, I'm not a first time home buyer" This is a misconception that I have found many people to have.
FHA stands for "Federal Housing Administration"
What is the Federal Housing Administration?
They provide mortgage insurance on loans made by approved lenders. FHA was created in 1934 to help spark the housing industry, in the 50's, 60's and 70's they helped with apartments for elderly, handicapped and lower income individuals. In the 80's they helped to even out falling home prices and helped homebuyers to get financing. They are on a comeback after several years of the housing boom today.
What is an FHA Loan?
A FHA loan is insured against default by the FHA. FHA guarantees that a lender won't have to write off a loan if the borrower defaults. With this guarantee lenders are willing to take a risk on the borrower.
Who can get an FHA Loan?
Just about anybody that meets FHA requirements. Even if you own a home right now and you sell and purchase a new home, you can get a FHA loan. Typically you can only have one FHA loan at a time but there are exceptions to that rule too.
What are the Benefits of a FHA Loan?
FHA loans allow borrowers to buy a home with a low down payment and sometimes that can even be a gift from a family member! There is no prepayment penalty; some may be assumable and possible leniency during financial hard times.
Drawbacks of a FHA Loan
They have limits on purchase price *see below. Sometimes with good credit and money down you can find more competitive offers. Always compare your options!
FHA Loan Amounts for single family homes- taken from FHA website on 09/23/08
Madison County, Illinois - 281,250
St Clair County, Illinois - 281.250
If you would like more information on purchasing a home, please contact me!
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