Loans backed by the Federal Housing Administration (FHA) have become increasingly popular over recent years. Some of the reasons for their renewed popularity are as follow:
The Federal Housing Administration's role in mortgages is different from the role of Fannie Mae and Freddie Mac. The FHA doesn't "buy mortgages" from banks like Fannie and Freddie do to create market liquidity. Rather, the agency is an insurer of mortgages. The agency's function is to repay the bank's loss in the case of default, much like an auto insurer would pay a consumer for a loss due to accident.
FHA mortgages will come with two types of mortgage insurance premiums; the Upfront Mortgage Insurance Premium (UFMIP) and the annual Mortgage Insurance Premium (MIP). All FHA-insured homeowners are required to pay both forms of MIP.
Low interest rates and low down payment requirements make FHA loans a great option. Please feel free to contact us with any questions or if you’d like to learn more about FHA loans.
-The Kavanewsky TeamShare on Twitter Share on Facebook