FHA Loans Popular Once Again
Posted by Benjamin Dona on Tuesday, June 10th, 2008 at 8:51pm.
The number of FHA loans issued shot up 126% in the first quarter of 2008 even though they still make up a just small part of the overall mortgage market. Demand for these often-neglected mortgages is surging because they do not require the higher down payments or stellar credit scores that lenders expect from borrowers for conventional loans. In addition, the amount of money people can borrow on these loans is up dramatically this year and many homeowners now find them attractive once again for both purchases and refinancing alike.
FHA's market share is currently about 10% - up from 2% in 2005. The program made its biggest gains in pricier areas where the down payment requirements for other loans is out of reach for many borrowers. Most observers attribute the growth spurt in part to federal legislation that temporarily raised the FHA loan limits nationwide, broadening the number of people who can use these loans as a financing option. It also only requires a 3% down payment for purchases or a 3% equity position for refinances.
Drawbacks include being able to fully document your income to qualify and the paperwork requirements can be a hassle. With all the problems facing today's mortgage marketplace, the FHA loan program stands out like a shining star. The only concern we can see is whether or not the agency can handle the growing workload.
|Share Our Post:|
About the Author
Benjamin Dona is the Broker and Owner of Gulf Coast Associates, Realtors in Bonita Springs, Florida. He holds two advanced degrees, an MBA and an MA, and has an extensive background in both business and marketing. In 1998, he founded Gulf Coast Associates, and formed a group of like-minded Realtor® associates dedicated to offering professional Southwest Florida real estate services by concentrating on information, education and the use of leading edge technologies. He also is a recognized expert on the "Net," a much-quoted and read blog author, and a contributor to both national and international news outlets. Benjamin is a member of the National Association of Realtors, the Florida Association of Realtors, and numerous local real estate boards throughout Southwest Florida.
Contact Benjamin Dona at 239-948-3955
Southwest Florida Real Estate Blog