FHA Releases New Loan Limits for 2007

FHA Releases New Loan Limits for 2007
By John Occhi, Hemet REALTOR®
Hemet CA, Real Estate

I saw a great article this morning that was published by Inman News about the FHA loan market.  Jack Guttentag, the author explained why the program is so valuable in today's real estate market.

Jack compares the program and how it works today and compares it to 2000, when it dominated 15% of the real estate mortgage loans that consumers borrowed and how it fell to only about 5% of all real estate related homes in the year 2006.

An FHA Home Loan, which is administered by the US Department of Housing & Urban Development (HUD) is a very good product and one that is often overlooked.  Hemet CA real estate, for example, the average price is still in the low to mid $3's.  So, our nicest neighborhoods won't be financed with the FHA product, but we have many great areas  and homes that still fall into this price range.  (Check with your lender or the FHA website for rates in your county because they will vary anywhere from the low $200's to the max of $280,749 up form the 2006 limit of $261,609.)

Jack reports that one of the major reasons for the decline in popularity is because of all of the new loan products that helped fuel the recent real estate boom.  The FHA loan still requires a 3% cash down - unlike all of the 100% financing mortgage packages that have become available with zero down financing.

In an Article published by Lew Sichelman in the Realty Times, Lew goes into detail on how the loan limit process is determined.  Lew also give the new loan limits for multi-family properties, a loan the FHA still eagerly does.

"These new loan limits will further...expand home ownership opportunities for many more families while helping the FHA mortgage insurance program keep pace with the robust housing market," said HUD Secretary Mel Martinez.

An FHA Home Loan is a great product for those with less than perfect credit (read my blog post about credit preparation) who typically do not qualify for the best loans.  FHA is a great way to avoid the subprime market, as long as the borrower can come up with the required 3% cash down (although with the right lender, you can even skirt this issue - sometimes).

The sub-prime market will generally have a pre-payment penalty and a high margin which almost guarantees a rate increase.  With FHA real estate loans, a Hemet home for sale can be purchased using a loan product that has no pre-payment penalty and even with mortgage insurance, the rates will typically be lower than a sub-prime mortgage.

FHA also has some very relaxed rules when it comes to foreclosures and bankruptcies.

I recently wrote a blog article about the entire loan process - from the prospective of a REALTOR that I think you should take a few minutes and read, if you haven't yet.

Now Have a Blessed Day,

John Occhi, REALTOR®
Your Resource for Hemet CA Real Estate
http://www.johnocchi.com/