I can remember a time in the not too distance past when FHA was the ugly sister to the slick conventional mortgage products.
It made sense too. FHA is a fully documented loan and there are no corners cut when processing these loans.
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.
Mortgage brokers had a big selling point in that interest rates for FHA were comparable to the conventional mortgages.
Even as early as the late '90s lenders began reducing restrictions on mortgage underwriting. This financial fiasco started long ago. It was not long after 2000 that even zero down conventionals were better than FHA.
If the lenders could only take the last 10 years back.... I think they might.
The financial disaster resulting from the greed on Wall street to poor leadership at the mortgage servicing companies will be felt far and wide for the next ten years. Conventional products are extremely limited now.
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.
Most conventional loans require at least 10% down now. FHA does and always has required very light down payment. To be more precise three percent is all that is required.
And credit is based on payment history rather than scoring.
The problem with conventional loans is they are truly score driven. The government loans cater to those who may not have great scores.
The economy of the last two years has affected many people's credit.
What I'm getting at here is the government loan is a make sense option when conventional loans are hiding under a proverbial rock.
FHA mortgages, though a former ugly duckling, will be savior to many in the coming years. - 15224
It made sense too. FHA is a fully documented loan and there are no corners cut when processing these loans.
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.
Mortgage brokers had a big selling point in that interest rates for FHA were comparable to the conventional mortgages.
Even as early as the late '90s lenders began reducing restrictions on mortgage underwriting. This financial fiasco started long ago. It was not long after 2000 that even zero down conventionals were better than FHA.
If the lenders could only take the last 10 years back.... I think they might.
The financial disaster resulting from the greed on Wall street to poor leadership at the mortgage servicing companies will be felt far and wide for the next ten years. Conventional products are extremely limited now.
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.
Most conventional loans require at least 10% down now. FHA does and always has required very light down payment. To be more precise three percent is all that is required.
And credit is based on payment history rather than scoring.
The problem with conventional loans is they are truly score driven. The government loans cater to those who may not have great scores.
The economy of the last two years has affected many people's credit.
What I'm getting at here is the government loan is a make sense option when conventional loans are hiding under a proverbial rock.
FHA mortgages, though a former ugly duckling, will be savior to many in the coming years. - 15224
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