FHA Secure Loans
FHASecure Loans Program – An Overview
The FHASecure loans program was launched during the Bush administration and as is the case with all FHA programs; it seeks to make the whole process of borrowing a loan easier for those people who cannot afford the high interest rates, and strict payment terms of conventional loans.
The Concept of FHA Secure Loans
The FHASecure loans will be underwritten to ensure that all borrowers who opt for the loan can repay the loan in the pre-designated time frame. Moreover, like all other FHA products this one will also charge escrow for taxes and insurance. It will also offer foreclosure prevention assistance.
The FHA secure home loans will follow the FHA custom of not including pre-payment penalties or teaser rates, which is something that many mortgage companies follow. All in all, this FHA program is at its core an insurance plan that is being funded by borrower premiums.
Borrower Requirements for the FHA Secure Program
» A borrower must have a history of making his or her mortgage on time and before the teaser rates have expired and the loan rates have been reset. What this essentially means is that if for any reason, prospective borrowers have missed their payment; they won’t qualify for the FHASecure Loans.
» The whole objective behind these loans is to drop the existing down payment to zero. It is one of the keys aspects of the FHA modernization proposals that are going to be incorporated into the FHA Secure program. This aspect needs congressional approval and as we well all know, such approval is not assured in many cases.
The 3% Standard
Many borrowers, who are burdened with toxic loans, might not be able to meet the designated 3% down payment as they had put nothing down for their loans in the first place. These days’ home prices have seen a drastic fall, which essentially means that these borrowers have a little less that 3% equity in their homes. Also, in many cases, these borrowers have a larger loan balance than their properties are worth. These people will find it very difficult to qualify for FHASecure Loans.
The FHA Secure Program Answer
In a bid to answer the 3% problem, the FHA only offers these FHASecure home loans to those who can show a valid documentation or a sustained history of employment and sufficient income that will allow the borrower to make the mortgage payment. This is opposed to the various FHA programs in which one could only state the income and documentation was not required.
As can be seen, though FHASecure home loans offer great benefits to borrowers, but they have some stringent conditions attached to them. To know more about them, it is first necessary that you search for a mortgage company that offers FHA loans and then ask them for details regarding the same.
