Real Estate: 0 to 5 % down with
government insured mortgages
Federal Housing Administration (FHA)
Mortgages - The FHA was established by the federal government in 1937 to
make home ownership possible for more people and to administer the home loan
insurance program. It was consolidated into the Department of Housing and Urban
Development (HUD) in 1965. Among its other responsibilities, the FHA sets credit
standards and loan limits, monitors loan quality and availability, and insures
lenders against mortgage losses. That insurance, for which borrowers pay a
mortgage insurance premium, encourages qualifying lenders to make FHA loans.
It's important to repeat that FHA does not provide the loan, it just insures the
mortgage for FHA approved lenders.
While FHA mortgages resemble conventional
mortgages, there are some significant differences. The buyer's closing costs are
limited, the required down payment is much lower (usually 3 to 5%), and people
who may not qualify for a conventional mortgage because of previous credit
problems may qualify for an FHA loan. Further, these mortgages are assumable,
which means a new buyer can take over the payments without having to secure a
new loan.
There is a price ceiling on the amount a
homebuyer can borrow with an FHA mortgage, based on the state and county where
the property is located. There are also some expenses, including required
mortgage insurance, that the borrower must pay. There is extra paperwork and
extra appraisal processing time associated with this type of loan. In a good
home selling market, where a seller mat expect several buyers, sellers may be
reluctant to deal with purchasers that are using this type of financing. For
information on FHA loan and other Housing and Urban Development (HUD) programs
visit the HUD web site at
http://www.hud.gov/
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What is a HUD
Homes Program?
When someone with a
HUD or FHA insured mortgage can't meet the payments, the lender
forecloses on the home; HUD pays the lender what is owed; and HUD
takes ownership of the home. Then sell it at market value as
quickly as possible. HUD owns homes in many communities throughout
the U.S. and offers them for sale at attractive prices and
economical terms. For more information on HUD homes go to
http://www.hud.gov/ |
Veterans Administration (VA) Mortgage - These loans are made by a lender,
such as a mortgage company, savings and loan or bank. VA's guaranty on the loan
protects the lender against loss if the payments are not made, and is intended
to encourage lenders to offer veterans loans with more favorable terms like
100% financing (0 down payment). The amount of guaranty on the loan
depends on the loan amount and whether the veteran used some entitlement
previously. With the current maximum guaranty, a veteran who hasn't previously
used the benefit may be able to obtain a VA loan up to $240,000 depending on the
borrower's income level and the appraised value of the property. The local VA
office can provide more details on guaranty and entitlement amounts.
If you are doing a VA (Veterans Administration)
Approved Mortgage you need to have the following paperwork completed: A
certified copy of your DD Form 214 "Certificate Of Release Or Discharge From
Active Duty". Within about 3 weeks VA will send you Form 26-8329 (CG)
"Certificate Of Elegibility For Loan Guaranty Benefits". For more information
about this government program visit the VA Home Loan site at
http://www.homeloans.va.gov/
Do you eligible for a VA loan?
Veterans who served on active duty and were discharged under conditions other
than dishonorable, during World War II and later periods are eligible for VA
loan benefits. World War II (September 16, 1940 to July 25, 1947), Korean
conflict (June 27, 1950 to January 31, 1955), and Vietnam era (August 5, 1964 to
May 7, 1975) veterans must have at least 90 days' service. Veterans with service
only during peacetime periods and active duty military personnel must have had
more than 180 days' active service. Veterans of enlisted service which began
after September 7, 1980, or officers with service beginning after October 16,
1981, must in most cases have served at least 2 years.
Persian Gulf Conflict. Basically, reservists and National Guard members who were
activated on or after August 2, 1990, served at least 90 days and were
discharged honorably are eligible. VA regional office personnel may assist with
eligibility questions.
Members of the Selected Reserve, including National Guard, who are not otherwise
eligible and who have completed 6 years of service and have been honorably
discharged or have completed 6 years of service and are still serving may be
eligible. The expanded eligibility for Reserves and National Guard individuals
will expire September 30, 2003. Contact the local VA office to find out what is
needed to establish eligibility. Reservists will pay a slightly higher funding
fee than regular veterans. (See paragraph entitled "Costs of Obtaining a VA
Loan").
Next -->>
Risks of cosigning for a
loan
Table of Contents:
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Should
you buy a home?
Renting vs. Buying:
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Steps to buying a home
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What is a
Mortgage and do you needed?
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Different types of Mortgages
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More Mortgage
Choices
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0 to 5% down
with FHA and VA loans?
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Cosigning: The Pitfalls
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Qualifying for a
Mortgage
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How much of a
mortgage and a house can you afford?
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Finding a home with FSBOs & Real Estate Agents.
- It's closing
time: Title and the keys please!
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Tapping your home
equity: Refinancing
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Tapping your home equity: Home Equity Loans
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Frequently
Asked Questions (FAQs) on Real Estate & Mortgages
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