FHA mortgages – those insured by the Federal Housing Administration – have long been considered one of the best ways to finance the purchase of lower-priced homes, particularly for first-time buyers. Recently the FHA overhauled their programs, making their mortgages more attractive to consumers.
FHA mortgages are especially well known for their low down payment requirements. In many cases buyers only need three percent of the purchase price, with military personnel paying as little as 2.25 percent. And some of that cash requirement can be applied to closing costs. However, FHA had its fair share of burdensome requirements that have made these loans less appealing in recent years, according to a report from the National Association of Mortgage Brokers.
“It wasn’t uncommon for an FHA loan to be held up because an inspector found a cosmetic flaw in a house,” said NAMB’s FHA Committee Chairman. “This all changed when HUD (Department of Housing and Urban Development) recently adjusted some of its requirements for FHA loans.”
In December, the FHA waived the requirement to fix cosmetic flaws. It also made it easier for consumers to negotiate payment for common mortgage costs. Previously, the seller had to pay all non-allowable expenses. This would include items like the processing, document preparation, inspection, photo, tax service and underwriting fees. With the exception of the tax service fee, these costs can now be paid by the buyer, adding more flexibility in the mortgage process, the NAMB report said. It also noted that FHA mortgage insurance is much cheaper than private mortgage insurance.
Source: http://www.ArticlePros.com/author.php?Jim Woodard
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