Dissecting Today's FHA Loan

Is an FHA Loan Always the Best Choice?

As a North County home buyer, you likely well know that there are a variety of home loan and mortgage products available to you, each with its own list of pros, cons and appeal. A Federal Housing Administration (FHA) backed loan is one such option for first time home buyers. However, according to MoneyWatch, if you're thinking about possibly taking out an FHA home loan, there are a few things to consider.

First, a little background for you - FHA loans help home buyers purchase their first homes by making it easier for them to qualify. They require smaller down payments and feature low interest rates lower than most other viable loan options, which made them ideal for buyers who might not have the highest of credit scores or huge balances to put down as a down payment. Of course every pro has its con and in this case it was usually a small one and that is that buyers with an FHA loan usually have to pay a tish bit more for mortgage insurance.

Well, here's the thing....apparently the FHA is experiencing a cash crunch of sorts. As MoneyWatch indicates, "Congress requires the agency to keep cash balance equal to at least 2 percent of all outstanding loans in its mortgage insurance funds. But due to the slew of bad loans taken on during the housing crisis, the agency isn't meeting that goal."

What does this mean?

Click here to read the rest of my blog post and find out!