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By Tom Ramsey | Broker in Portland, OR

What is FHA?

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FHA stands for Federal Housing Administration. This  organization aims at improving standards of housing and offer mortgage  insurance policies. This is extremely suitable for the lower middle  class  families with insufficient financial resources to purchase their  own  independent houses. Such schemes have opened up the home purchase  markets to  more and more people with average or below average income.  There are several  facilities offered for first time investors.          The insurance policy  targets the mortgage sections. First-time  home buyers can now opt for  protection with FHA insurance schemes. People unable to summon  up their financial resources for that  twenty percent down payment are now  looking for suitable mortgage  insurances such as FHA insurance. But the FHA  insurance may or may not  be cancelled if the borrower has crossed a certain  level say about 75  percent of the payback on the loan.

The yearly payments for FHA insurance are then stopped. This  insurance  policy is run by the government. It offers much more benefits  than the private  mortgage insurance plans. Of course, the approval is  not quick enough but  patient customers can find a good scheme to insure  themselves on their  mortgages. These usually protect the mortgage until  the loan is paid off  completely. The loan limits are lower than  privately run mortgage  insurance policies. Conventional insurance policies have lower  premiums than FHA  insurance but people prefer FHA insurance. Monthly MIP  (mortgage  insurance premium) sums have to be paid.          FHA  insurance has some conditions like a maximum regional limit  for loan.

Condos are not given the cancellation option  for FHA  insurance. FHA insurance also aims at protecting the agencies  that lend  mortgage loans. They provide a boost to the real  estate market and also improve the housing standards. Such an  insurance policy is  offered only to people who meet the eligibility criteria.  They must be  capable of paying back the borrowed loans. Of course, people  tagged as  loan defaulters may never be able to apply for FHA insurance.  Normally,  the time period for insurance may go up to three decades.           FHA insurance can also be used to cover expenses for  condomiums, single residences etc. many of the schemes  also require the policy owner to occupy the  property during the insurance  covered period. FHA policies are also  handy when it comes to renovation or  repairing of residence.  A current  loan maybe up for refinance as well, in  which case the customers can opt  for suitable FHA insurance. Websites like  www.foreclosure1.com are  helpful in this regard.

The MIP normally starts off at a rate of 3/2 % of the new loan.  Some  individuals also get cash unexpectedly and can pay back the loans  much earlier  than previously estimated. In such cases, the FHA insurance  can be cancelled.  The excess premiums may also be repaid to the policy  holders. Policy may also  be sanctioned for people with not so good  credit records if they offer good  potential.

Tom Ramsey
www.PortlandHouseListings.com

Oregon Real Estate Principal Broker

John L Scott Real Estate

Phone: 503-481-0501

Fax: 503-775-0754 

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