 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
|
|
FHA & VA Loans
The Department of Housing and Urban Development (HUD) authorizes the Federal Housing Authority (FHA) to insure lenders against foreclosure loss for any residential mortgage that does not exceed Congressionally set loan amounts.
The FHA was created by the National Housing Act of 1934 to help revive and stabilize a housing market devastated by the Great Depression and the breakdown of the banking system. It did so by providing federally backed mortgage insurance, first for construction loans and then long term mortgages. By meeting credit history and down payment criteria established by FHA, a borrower could obtain a 20 year fully amortizing mortgage loan.
FHA maximum loan amounts vary by state and county. Programs available are a 30 Year Fixed, a 15 year Fixed and a One Year ARM with a 1% annual cap and a 5% lifetime cap.
Eligibility for FHA Loans
FHA financing is available for any qualified person; however, the property must be the occupying borrowers primary residence.
Advantages of FHA Loans
- Low down payment
- An assumable mortgage subject to approval of assumer's credit
- Right to prepay loan without penalty
- Ability to finance closing costs
The Department of Veteran Affairs (VA) guarantees up to a specified percentage of loans made by lenders to entitled veterans. The veteran is not required to make a down payment on a VA-guaranteed loan. Aside from the veteran's certificate of eligibility and the VA-assigned appraisal, the application process is not much different from any other type of mortgage loan.
At the end of World War II, Congress searched for ways to reward those who had served the US admirably during the War. Congress passed the Serviceman's Readjustment Act in 1944 which both rewarded veterans and helped them adjust to a peacetime society. One portion of the act created the Veterans Administration (VA).
One of the main goals of the VA was to make home buying easily accessible to those who served in the> US armed forces. Congress authorized VA to guarantee the repayment of mortgage loans, up to a specified amount, granted to qualified veterans and allow the veteran to make little or no down payment on the purchase of a home.
The maximum VA loan amount is set at $203,000. Current programs available are a 30-year fixed rate and a 15 year Fixed rate.
Eligibility for VA Loans
Certain veterans, Selected Reservists, and National Guard personnel are eligible for VA-guaranteed home loans. The length of service required varies based upon the period of time he or she has served.
Advantages of VA Loans
- No down payment required in most cases
- No monthly insurance premiums
- Right to prepay loan without penalty
- Limitation on buyer's closing costs
Mortgage
&
Title