FHA Loans

1. FHA loans were originated to help moderate income or first-time home buyers. True They were developed to assist people who otherwise would not be able to afford to purchase their own home. They typically have good terms. Individual lenders set interest rates and repayment periods depending on the borrower's ability to repay the balance. The borrower's credit plays a large part in the interest rate they will receive. 2. The Federal Housing Administration lends FHA loans. False All financing is made by the lender only. The Federal Housing Administration guarantees the financing. The Federal Housing Administration also sets the guidelines for approval, interest rates and insurance costs. Every borrower that utilizes the low down payment option must pay Private Mortgage Insurance or PMI in addition to other related insurance premiums. 3. Government loans require less of a down payment than other loans. True One of the main advantages of this type of financing is the small down payment required. It is usually around 3%, but has been known to be able to wrap into a 100% mortgage. The Government realizes that not everyone can pay huge upfront costs. Also, a borrower cannot be penalized for making extra payments, or completely pre-paying their balance before it is due. 4. Lenders can charge outrageous administrative processing fees on FHA loans. False The origination fees charged by the lending financial institution for the administrative cost of processing the loan may not exceed 1 percent. Unlike other programs, the processing fees when lending fund through the FHA program are regulated. This enables borrowers a safe way to purchase their first home without out fear of being taken advantage of. 5. Government loans are a way to help people. True Psalm 112:5 - A good man sheweth favour, and lendeth: he will ever be mindful of his covenant. First Time Home Loans