	Article Directory		Article Submission Service		Article Marketing Blog		Publishers		Member Log In

Article Directory :: Finance & Investment Articles

FHA Loans in the 21st Century

By Nick Kent

Republish: EasyPublish™
Published: 13Oct2008
Word count: 536
Viewed: 156 time(s)

Get Free Content For Your Site

Earlier this year, congress and the Bush Administration enacted the Economic Stimulus Act of 2008, in an effort to stimulate business investment and attempt to avert impending crisis and recession. Needless to say, their efforts haven't been terribly effective so far, for reasons we're all familiar with. What you likely remember about the act is that you received a $300-$600 rebate check after filing your taxes this year, but what you may not recall is that the act also affected the ceiling for FHA-insured home loans.

Prior to March 6, 2008, the limit for FHA loans was $362,790. That meant that the FHA could not legally insure loans above that value. As part of the stimulus package this year (referred to as the "FHA Forward" program) however, congress authorized the Federal Housing Administration to increase their maximum loan limit from $362,790, to between $271,050 and $729,750, depending on location and the size of the home. For instance, in Denver the FHA will now insure mortgages on single-family homes as high as $406,250. The most populous areas with the highest costs of living such as New York City and Los Angeles have seen their limits increased to the full $729,750.

As private mortgage insurance became widespread, and other options saw increased availability early this decade, FHA loans lost popularity, but in the past several months FHA loans have seen a resurgence. With many former sub-prime lenders recently on the edge of default, lending institutions have become hesitant to (and in some cases simply can't afford to) offer 100% mortgage loans, and FHA loans have become an alternative for consumers who otherwise would be unable to acquire financing for a new home.

The Federal Housing Administration was created as part of the National Housing Act of 1934 (subsequent to the New Deal creation of the Securities and Exchange Commission), as a reaction to the collapse of the banking system in the 1930's, in order to counteract the vast decline in home ownership during the Great Depression. It's no surprise then that consumers are returning to the FHA for assistance now, as we enter what is generally considered the greatest economic threat the U.S. has faced in nearly eighty years.

An important distinction to make is that the FHA does not itself originate loans, but rather insures lenders against loss, should a borrower become unable to meet the terms of the loan. That being the case, all FHA loans are not the same. Different lenders offer different terms and incentives, and for that reason consumers should consider meeting with a Certified Mortgage Planner (not the same thing as a broker) who can assist them in comparing offers from the lenders who meet their criteria.

With the latest polls showing continuous decrease in consumer confidence, and increase in pessimism regarding the economy, it's not surprising that we're looking to some of the same institutions for help now that we did during the Great Depression. It's impossible to say for sure what will happen over the next few years, but at least we can take comfort in something this time that we couldn't last time: we've been through it all before.

Rate1st is the United States' largest online lending network, and is proud to provide a easy, efficient and safe way to shop for an FHA loan during trying economic times. To contact a Certified Mortgage Planner about information on FHA loans, please visit http://www.Rate1st.com.

EasyPublish™ this article - publishers click here