Wednesday, February 5, 2014

Funding the American Dream

One of the essential elements of the American Dream is home ownership. A number of government programs are in place to assist in fulfilling these dreams and assist prospective homeowners. Very few government programs actually fund money for mortgages. Rather, they provide government guarantees to those who loan the money to the purchasers.

Each program is designed for a different purpose and has different qualifications to specify who can obtain a loan. For example, the Veterans Administration loans are limited to qualified military personnel and veterans. On the other hand, FHA home financing is available to all first-time home buyers who meet other criteria.

The structure of the FHA program is designed to help people seeking to begin their role as homeowners. If someone has good credit and is considering a lower-priced home, they are good candidates for considering such a government-backed loan. Under the current rules for a FHA loan, it takes as little as 3.5 percent of the purchase price for a down payment. Even with some credit problems, a first-time buyer may qualify. One of the additional qualifications looks at a potential borrower’s ratio of debts to income.

Even though all government-backed loans are considered conforming loans, the FHA application is somewhat simpler and has fewer restrictions than most other mortgages. An experienced real estate agent will know about the many programs and government-back loans. Sorting through the various advantages and restrictions can be demanding. However, finding the right mortgage can save many thousands of dollars over the life of a loan and makes the effort worth it.

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