FHA Loan

Federal Housing Administration has introduced FHA home loans to help homeowners that want to refinance their homes. The best way to succeed in getting a FHA home loan is to display that you have been a dependable credit holder for a minimum period of two years. In order to achieve this, you have to pay down all your old debt and refrain yourself from any large credit purchases. Also, you should stay with the same employer for some time. You can qualify for an FHA loan which is much easier than getting a mortgage from a lender, but you have to demonstrate secured employment, dependability and ability to make your repayments on time.

Generally, FHA loans are geared towards those who have taken adjustable rate mortgage loans from private lenders and who are unable to continue on their mortgages. The main purpose of giving out FHA secure loans is to slow down the record foreclosure rate in the United States. It is designed in such a way that the homeowners can afford the mortgage payments and can keep their home even when the interest rates increase rapidly in the private lending market.

Any homeowner who has adequate income to make payments on their home loans can submit an application to refinance their ARM mortgage with the FHA secure program. Also, option ARM home loan holders that had their mortgage "recast" to wholly amortizing are also eligible for FHA loans. Homeowners with a second mortgage can also apply for these loans. FHA has not set any ceiling on how many payments you have not paid on your mortgage. The refinance amount entirely depends on the value of the property and the amount you owe on your various loans.

You have to do the following paperwork in order to qualify for the FHA home loan:

  • Your previous residence addresses for two years. If you are a couple jointly applied for the home loan and have different addresses then you have to include both the addresses.
  • Your employment history for at least two years in which you have to give the employer's name and address along with your monthly income. You have to produce a letter or bank statements or a pay stub to prove your employment.
  • You have to keep ready your income tax forms and W2 forms for the past two years.
  • If you are an expert, you have to include the proof and details of your veteran status.

By refinancing through a FHA loan, you can benefit from the lower monthly payments on your mortgage. Also, you can enjoy more stability and can avoid default. There will be no teaser rates, prepayment penalties or balloon payments. FHA wants its lenders to provide FHA loans in accordance with the market rate for as long as thirty years. As the FHA loans are entirely amortized, you can pay down your loan quickly. That is, the payment that you make each month will be utilized towards both your principal and interest. So, take advantage of FHA loans to make you free from the mounting debt trap!

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