Understanding Basic FHA Requirements for Mortgage Loans
Article by Mortgage Guru
This is the story of my friend, PhilipsMy friend Philips was under the impression that obtaining a home mortgage loan through the Federal Housing Administration (FHA) was the easiest and most cost-effective way to finance the purchase of his new home. That was until he discovered that the FHA is all-set to increase its premium charges for mortgage insurances from the previous 1.75% to the new 2.25%. The new FHA requirements have also made it compulsory for potential borrowers with low credit scores to apply for lower loan sums. In other words these borrowers need to fork out larger down payments for their home purchases. The new FHA requirements have also effectively reduced the amount of money that a seller can provide a buyer in terms of closing costs, and would also effectively tighten enforcement of lenders that are backed by the FHA. With these new rules being enforced, Phillips realized that obtaining a large loan through FHA would now be slightly more difficult, especially as his credit score is hardly in the best of condition. Nevertheless the security that comes with these mortgage loans is something that would still attract plenty of homebuyers, as FHA