(ARA) - The sky is falling, the sky is falling! Or so you would think if you listened to all the news coverage about the mortgage market. The news is filled with reports of declining home values, resetting adjustable-rate mortgages and people feeling the pinch of tightened credit.
However, despite the doom and gloom, much of the media haven’t reported on the proverbial silver linings in the storm clouds. One of the bright spots is the resurgence in popularity of a loan program that has been around since the 1930s -- the Federal Housing Administration (FHA) loan.
Historically used almost exclusively by consumers to purchase their first home because of its low down payment requirements and competitive rates, FHA loans are making a comeback and quickly gaining prominence among those looking to refinance as well.
“A large number of people are really benefiting from the FHA loan program, and what is most interesting is many of them have just recently been turned down for more traditional conventional loans,” says Bob Walters, chief economist for Quicken Loans, one of the nation’s largest mortgage lenders. “This program isn’t the answer for everyone, but we have found that it can be a very viable option for many people.”
According to Walters, FHA loans are being used by consumers for cash-out refinancings, or to consolidate debt up to 95 percent of the home’s value -- moves that are extremely difficult and often not financially practical to make with current conventional lending guidelines.
“Through the first half of 2007, homeowners had no problem making their mortgages work for them. However, since that time, tighter lending guidelines have resulted in many loan programs being taken off the table. Fortunately, FHA loans can fill some of the void. When used responsibly, FHA loans can provide much-needed relief. Every day, we help clients purchase homes, pay off medical expenses, eliminate high-interest credit card debt and generally improve their financial position through the FHA program,” Walters adds.
Consumers are also finding that in some instances, FHA loans can close very quickly, in less than 14 business days in some cases.
“The bottom line is that FHA loans are an option for many folks, but not for everyone. It is very important that every homeowner consult with a reputable lender who will listen to their needs and goals, and then suggest the best mortgage for them. In some cases it could be an FHA loan, and in others it may be a conventional fixed or adjustable rate mortgage. What is important is that the loan actually works for the consumer and puts them in the best possible financial position,” Walters concludes.
Courtesy of ARAcontent