Foreclosure Victims: FHA Schemes Are Good

For any real estate related problem like foreclosure the FHA can be contacted for genuine help. It is a semi-private agency controlled by the government. The aims are to help those with slim purses to become owners of houses. FHA does not itself advance loans but it negotiates with lenders to make the loan taking process smooth and easy.

The FHA has launched many programmes that have become popular. As per the 203(b) plan a 3% down payment can be made on a mortgage and not the usual 20% for purchasing or refinancing a house in which the owner wishes to reside or is residing respectively. There is however the condition that a mortgage insurance premium of 1.5% of the principal loan has to be added to the loan amount. That apart a monthly insurance premium on the mortgage calculated to be 0.5% of the main loan has to be paid. This will continue until the loan-to value ratio is 78% or equity of 22% has been built up.

Another programme is FHASecure. It is for people who have good credit ratings and have so far timely paid mortgage dues. This plan will help the borrowers to refinance their mortgage. This programme will save about 240,000 families. Here again there is a condition that those who are eligible for this plan will have to pay mortgage insurance premium. This will take care of the risk FHA is taking without burdening the taxpayer as regards insurance funds. The rate will be calculated according to the risk status of the borrowers. Those standing on shaky ground will have to pay more. The pricing schedule will come into effect from 1^st January 2008.

To be eligible the borrower must show that there has never been any previous failure in timely repayments until the time of resetting as well as an unbroken history of employment; the present income must make repayment affordable. Thirdly only those will qualify whose mortgage interest rates fall under the anvil of resetting between June 2005 and December 2009. Fourthly the borrower must have at least 3% cash or equity on the property.

FHA schemes are for good borrowers but who were tricked off the course into high cost loans by initial teaser rates and other blatant temptations. Most of the victims are minorities who need a safe anchor to hold on to which will secure their mortgage and prosperity.

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