The Current Recession
The real estate market in San Diego has been heavily affected by the ongoing recession; with many people struggling to keep up with mortgage payments. First time buyers are finding it difficult to even get on the property ladder, as buying stipulations have drastically changed in recent months. A large deposit is often required in order to purchase a property, and many would-be buyers have found themselves unable to come up with the large sum of money required for the down payment.
The Federal Housing Association
The Federal Housing Association, or FHA, however is still offering buyers the possibility of purchasing real estate with a minimal deposit. Potential buyers can apply for mortgages with the association and pay as little as 3.5% down payment on the property. Home buyers who have been knocked back by other lenders are flocking over to the Federal Housing Association hoping to get a loan which will enable them to purchase a home.
The Benefits
With many potential home buyers unable to find the money for the large deposit required from many mortgage lenders, FHA loans are often coming up as the answer. For buyers who have a good and steady income, getting a loan is typically not a problem. Applications are based on the annual income of the buyer which will affect how much of a loan can be afforded each month. Many buyers have found themselves able to buy a house with a FHA loan; with only a small deposit to pay and low interest rates.
What is the Catch?
There are no catches with Federal Housing Association loans, although buyers need to be aware that not all people get the lowest rates on offer. If would-be buyers have low credit scores, they may not be entitled to the lowest deposit. Individuals with low scores often find themselves having to pay a deposit of up to ten percent of the property value, although these figures do vary.
The Federal Housing Association also charges an added premium at the start of the loan which is used as insurance. The premium can be up to 2.5% and will cover the FHA in case of buyer default. The buyer should be aware that not only will they have to pay a deposit at the beginning of the term, but they will also need to pay the premium. Buyers also need to be aware that there is a small annual fee of 0.5% on top of their mortgage charged by the FHA.
Buyer Limits
Many people wishing to buy a home are currently applying to the Federal Housing Association for loans. Before starting the application however, potential buyers should be aware of the maximum amount that they are entitled to borrow. Different parts of the country have different financing limits set out for buyers, so prior research may be advised.
Federal Housing Association Profile
The FHA has an ongoing reputation of keeping property buyers in their homes. Foreclosures are rare, as the association works together with buyers as they struggle with payments. Loans offered by the FHA are increasingly popular, and there are high hopes that the increase in buyers will help to kick start the real estate market.
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