Understanding FHA…

In the previous months partially due to the Housing and Economic Recovery Act, FHA has been making some changes.  Some of these changes include an increase in down payment requirments to 3.5% effective January 1, 2009; elimination of down payment assistance programs as of October 1, 2008; as well as some underwriting guidelines pertaining to converting existing homes to rentals.  Are you currently in the market to buy a home and curious if you will qualify under current FHA rules, e-mail me at chris@cacartergroup.com.

It seems like everyday the press talks about FHA, government intervention, and how this will effect our economy and real estate market. The question is what is FHA?  First and foremost, understand that FHA is totally different from Freddie and Fannie. FHA insures loans and Freddie and Fannie purchase loans from banks.  If a FHA loan forecloses, FHA pays off the mortgage, takes ownership, and proceeds to sell the home (hence HUD homes).   To mitigate risk, FHA charges the borrowers insurance premiums in case of default.