Honoring the FHA’s Merits in the Past & FHA Loan Limits Change
Some people said that the U.S. is having the worst economy downturn it has ever faced in the past 80 years. That means the worst after the Fantastic Depression in 1930s. While that sounds gloom, many people has place high hopes on the President, to bring changes and helped the U.S out of its recession clouds.
Early last year, the Bush Administration has tried to rout the economic crisis, and the congress has come up with the Economic Stimulus Act 2008 which was aimed to encourage business investment. But, the program wasn’t quite a success. What people might remember was the $300-$600 check as part of the stimulus package. Anyhow, the stimulus package has also changed the limits for FHA-insured home loans, or as I would call, the FHA home loans (although the FHA does not lend money, but insuring your loans)
Since March 6, 2008, the FHA loan limits was changed into a range between $271,050 – $729,750 depending on location and the size of the home. Previously the FHA loan limits was $362,790. This is a part of the stimulus package in 2008 (referred to as the “FHA Forward” program). The more flexible FHA loan limits applies differently depending on its location and house size. For example, in populous areas with high cost of living such as New York City and Los Angeles the FHA loan limits for single-family homes could increase to the full $729,750 while in smaller city such as Denver, the FHA home loan could be just $406,250.
It has been several months since the FHA loans gained more popularity. Previously, the FHA loans were less well loved due to the increasing number of private mortgage insurance along with other options. Now due to the sub-prime crisis, many banks and lending companies have been reluctant to provide 100% financial help on home mortgage loans. Thus, the potential borrowers who wouldn’t normally be able to receive conventional financing for their home has found out that the FHA loan could be their best option.
Speaking of home financing, it is not the first time that the FHA has helped low-to-middle-income families to get their dream home. The FHA has helped U.S citizens during the worst era in the past 100 years, (if this era wasn’t the worst), the Fantastic Depression. And it has been proved to be a success. Here’s the tale:
The Federal Housing Administration (FHA) was made as part of the National Housing Act of 1934 (subsequent to the New Deal creation of the Securities and Exchange Commission), as a reaction to the collapse of the banking system in the 1930’s and the vast decline in home ownership.
The FHA itself does not give loans, they insures lenders against loss, in case the borrowers default. Thus the lenders are encouraged to give low interest rates and low down payment, and low closing rates, to people that will probably unfit for any conventional home loans. Hence, different lenders are free to offer different terms and incentives. That’s why you should consider finding the help of Certified Mortgage Planner who can help you in comparing offers from the FHA mortgage lenders.
Although the future of the U.S. economy looks bleak and consumer confidence are failing, at least we could confide in the institution that had helped us during the Fantastic Depression. The same institution that give its hand to the low-and-middle income people of America, people who, whatever their origin is or whatever their jobs are, those who have the right to dream as our pioneers had: the American Dream.
Also read: FHA Refinance and FHA Secure
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