Las Vegas, Nevada (PressExposure) October 27, 2009 -- FHA mortgages are sizzling hot! So hot, homeowners across America should be taking advantage of this unique program to buy a house or refinance an existing home loan whenever possible.
Assuming FHA's benefits are immeasurable, what's stopping the public from going out today to apply for this low down payment mortgage? The answer can be summed up in two words:
First of all, a little background. FHA is a low down payment mortgage program insured by the federal government. Insured? Mistakenly, it is often believed that FHA insurance extends to homeowners, providing coverage in the event of unemployment or catastrophic illness. In actuality, it is the lender who becomes insured, that is insured against a borrower's default.
Now this fact might inspire some to wonder if FHA mortgage insurance is only of benefit to the lender, why does the borrower pay the premium. Just remember the two words:
Yes, FHA mortgage insurance premiums are paid on behalf of the lender by the homeowner in the monthly house payment. Even so, there's good reason to feel happy about this. This fund allows a lender to extend more favorable terms to prospective borrowers, such as minimal down payments, low closing costs and stable terms.
Keeping this in mind, why aren't multitudes of loan applicants beating down the doors to FHA mortgages? The biggest reason is the prevalent self-use of FHA eligibility calculators. Case in point, recall this ancient adage:
"The doctor who treats himself has a fool for a patient."
Kate Ford at Self-Diagnosing FHA Qualifications [http://www.prime-real-estate-articles.com/fha-eligibility-calculator.html] tells the story of a physician convinced his blurred vision and recurring headaches require brain surgery. Every week he notices the searing pain between his temples growing increasingly severe. Overcome with grief, he schedules surgery but is required by the hospital to first consult another doctor. After mustering up enough courage to ask for a second opinion, he is amazed to discover a $50 pair of reading glasses restores his vision and halts his migraines.
If a physician with decades of education is not qualified to diagnose his own condition, how much more so is the home buying public not capable of determining whether they are qualified for FHA mortgages, the simply complicated loans.
But what can it hurt some might ask to use a self-qualification tool? The danger lies with not understanding the many exceptions to guidelines and also being too close to one's own circumstances, all the while missing out on a winning combination of low interest rates and decreasing real estate values.
Summed up, FHA mortgages with their astoundingly low down payment options are both simple and complicated. Simple? You bet! Low down payments and affordable closing costs. Complicated? Of course! They're insured by the federal government!
So don't make the common error of diagnosing yourself like the MD who was sure he needed brain surgery only to find out a new pair of glasses were indicated.
For both refinancing and buying a house, FHA guidelines can take surprising twists and turns. Instead of self-calculating mortgage eligibility, look for an FHA lender who inspires trust. Begin by asking friends who they used for their last mortgage and whether they would again. Secondly, consult a real estate agent who often has the best contacts found in the lending industry.