FHA Home Loans & Goverbment Mortgage Refinancing

We all try to find the best deal when shopping for a mortgage. And, you’ve probably hear of the FHA loan. FHA stand for Federal Housing Administration, and with built-in mortgage insurance, an FHA loan could help homeowners save hundreds of dollars a year.

The law requires any loan for more than 80% of a home’s fair market value or FMV to carry Private Mortgage Insurance. In fact, Private mortgage insurance costs homeowners insurance premiums ranging from $250 to $1200 per year. And, the insurance is not tax deductible.

FHA Today.com shows “The Federal Housing Administration (FHA), a wholly owned government corporation, was established under the National Housing Act of 1934 to improve housing standards and conditions. Its goal was to provide an adequate home financing system through insurance of mortgages, and to stabilize the mortgage market.”

The FHA program basically has three types of loans:

1. BASIC FHA requires 3% down payment and allows refinances up to 97% loan to value.

2. Disaster Victim Program requires no down-payment and allows 100% financing of the home.

3. Rehab-Loan Program allows borrowing above the purchase price to make home improvements.

Hopefully, you aren’t the victim of a disaster. “It is not a program reserved only for first time home buyers.” Shows FHAToday.Com. “You can buy your third or fourth home with an FHA loan. The only stipulation is that you may only have one FHA loan at a time.”

An FHA home loan is like having mortgage insurance for free. All of the interest is tax deductible according to the IRS.

For the homeowner looking to pull equity out of their home. The basic FHA program allows a home equity refinance of up to 97% of the home’s FMV. That means, homeowners are allowed to pull 17% more equity out of their home, without worrying about the extra costs of PMI. And, an FHA loan could prevent homeowners from having to carry two additional loans to pull more equity. Carrying fewer loans could mean lower interest rates and lower Combined Loan to Value Ratio. With fewer loans ands a lower CLTV, an FHA home loan could save homeowners the extra cash they need.