Why Fha Loans, are Most Borrowers First Choice and Best Option.

FHA loans are the most widely used mortgage loan in the U.S. today. The Flexibility of this product has helped millions of Americans to realize the dream of home ownership.

First time homeowners especially benefit because of the low down payment requirement necessary to purchase a home purchase a home. Many people also use this loan to tap into the equity reserves that they have stored up in the valve of their home.

What most people don't know

FHA is actually not a loan. It is stands for the Federal Housing Administration. The FHA Is a federal agency within the United states Department of Housing and Urban Development. FHA Does not lend money it is rather, and insurance Program. FHA Mortgages are mortgages which are made by private lenders but are backed or insured by the government.

Ok, enough of FHA 101, here are some of the benefits to the borrowers. FHA allows the borrower to only have to invest 3% of

their own funds (soon to be 3 1/2 Jan 1, 2009) in the purchasing of a primary residence. This is great because many people do not have the ability to save much more than that.

FHA also allows for a few credit mistakes

to be forgiven or over looked.Other loan products would not be so forgiving. Sometimes life throws a curve ball your way and we all need a little help.

Interest rates on FHA loans are also relatively low because Uncle Sam backs them. The rate at which you are charged Private mortgage insurance is lower than other loans not backed by the government.

FHA loans are normally assumable meaning that someone can come along and if they qualify for and FHA mortgage you can have them basically take over payments. This would be beneficial to the buyer if the current mortgage rates where high and the one on your current loan was lower. It would be beneficial to the seller because it makes the sellers house more attractive because of the lower interest rate.

FHA flexibility will also allow a customer to have a higher debt ratio if they have a solid credit rating and enough cash reserves available in case of emergencies (savings in a bank, 401k and stocks). This gives the buyer added ability to qualify for a higher house payment.

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