Wednesday, July 1, 2009

How to Make FHA Work for You

One of the best real estate successes offering aid in this troubled housing market is the FHA loan program. What exactly is an FHA loan? For those who might still be confused about their financing options, an FHA loan is a United States federal assistance mortgage loan insured by the Federal Housing Administration. The loan program, usually issued by federally qualified lenders, can provide an affordable financing option for many first-time and second home buyers.

The current property prices offer an excellent opportunity for investing and because of this cash buyers have taken an active role in today’s real estate market. For home buyers who have had trouble competing with these cash investors but have 3.5 percent to put toward their purchase, finding an FHA approved condominium communities is an excellent option.

FHA recently came out with its long-awaited rules on condominium loans, and they are a mixed bag for investors, second home and other buyers and sellers.

FHA has said it will not insure units in condominiums where more than 25 percent of the total space is allotted to commercial uses, such as retail stores or offices. In fact, the agency made a point of emphasizing that it will reject loan applications from any property that it deems not "to be primarily residential" in character.

The agency won't endorse loans from projects where less than 50 percent of the total units already have been sold, or where less than 50 percent of the units are owner-occupied or sold to buyers "who intend to occupy them." FHA also won't insure condo loans if more than 10 percent of the units are owned by investors.

A small percent of condo communities in the Tampa area are FHA approved and finding these communities can be difficult. A mortgage broker or real estate professional can help buyers determine what properties are in fact FHA approved. Although they may not be as abundant, FHA approved communities do exist and it is important that buyers research their area of interest thoroughly. FHA guidelines were designed to protect home buyers from buying in high risk communities and working with a knowledgeable real estate agency will help ensure that buyers gain access to the best real estate in FHA approved communities.

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