How You Can Find The Cheapest Fixed Rate Mortgages With Fha
The real estate industry is full of different types of mortgages
, lending vehicles and so forth. For example, there are traditional mortgages and FHA loans. In a traditional mortgage, the buyer puts up 20 percent of the overall cost of the home and then takes out a loan for the other 80 percent. In an FHA (Federal Housing Administration) loan, the lender puts up 3.5 percent of the overall cost and takes out a loan for the rest.
The recent credit freeze has actually made FHA mortgages far more popular because banks such as Bank of America, Wells Fargo and JPMorgan Chase are making it increasingly difficult to borrow. As a result, getting an FHA approved mortgage loan is becoming the norm for home buyers.
There are also generally two different types of purchase money mortgages. The first is a mortgage that is given by the buyer of a property to the seller to secure the purchase price, these are also known as seller take back loans, and this type of purchase money mortgage is secured by the property being sold.
A second type of purchase money mortgage involves a "third party" and is given by a lender to secure a loan which was used to pay all or part of the purchase price on the property in question. In general, a purchase money mortgage involves the owner's or borrower's risk of losing the property and the foreclosure's impact on the owner's credit rating.
These types of mortgages have become far more necessary as home prices have shot up past the purchase point, meaning beyond what the normal homeowner can afford. Many people can afford a mortgage, but when the average home goes for four hundred thousand dollars in an area where people average $50,000 a year, buying a home with 20 percent down is quite difficult. As a result, various type of mortgage products were created to give home buyers a better opportunity to purchase a home.
Possibly the most widely known is the FHA loan, which has the 3.5 percent down payment; however, the purchase money mortgage has been gaining popularity where lenders are willing to consider traditionally unorthodox lending methods. Obviously, in the end, it's about a home buyer's ability to continually pay their monthly mortgage payment, whether they are buying a house for sale, a condo for sale or a town home for sale. These different types of mortgages allow people to have different methods available to them for buying a home.
Over the years, the average wage has not kept up with the cost of living, and so these different types of mortgages and lending tools were created to allow for greater home ownership. They have been successful in providing opportunities for people who would not otherwise be able to purchase a home.
by: J Chase
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