It wasn't all too long back when you couldn't find a mortgage broker or banker wanted to do a FHA insured mortgage. It was Conventional or bust.
When you break down the two types of mortgages its easy to see why with convention loans being much simpler to process than FHAs.
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?
The government loan was strong with 1st time home purchasers. Young people, especially, have less than perfect credit and little money to close on a home.
The benefit of the program was interest rates were roughly the same as the conventional products.
Over time, with easing of lender restrictions, FHA went by the wayside. Even the 100% conventional products were better than going FHA... At least from the borrower's perspective.
If the lenders could only take the last 10 years back.... I think they might.
Well, the rest as they say, is history. The ramifications will be felt for the next decade. Currently conventional zero down financing is gone, sub-prime is history, and sub-A products are on the rocks.
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.
From a credit perspective FHA looks more closely at on time payments rather than credit scores.
The problem with conventional loans is they are truly score driven. The government loans cater to those who may not have great scores.
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.
Though they may have been poo pooed, FHA loans are now rightly main streem.
When you break down the two types of mortgages its easy to see why with convention loans being much simpler to process than FHAs.
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?
The government loan was strong with 1st time home purchasers. Young people, especially, have less than perfect credit and little money to close on a home.
The benefit of the program was interest rates were roughly the same as the conventional products.
Over time, with easing of lender restrictions, FHA went by the wayside. Even the 100% conventional products were better than going FHA... At least from the borrower's perspective.
If the lenders could only take the last 10 years back.... I think they might.
Well, the rest as they say, is history. The ramifications will be felt for the next decade. Currently conventional zero down financing is gone, sub-prime is history, and sub-A products are on the rocks.
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.
From a credit perspective FHA looks more closely at on time payments rather than credit scores.
The problem with conventional loans is they are truly score driven. The government loans cater to those who may not have great scores.
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.
Though they may have been poo pooed, FHA loans are now rightly main streem.
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