How can a person refinance his home mortgage when he has bad credit standing? People ask this question a lot these days. So is there really such a loan mortgage to refinance a home for people with bad credit?
Although it may be too late to do that if the person is too late with his payments, but there is still an option out there that many consider and take. I am talking about FHA - Federal Housing Administration United States government program program which insures home loans and assists first time buyers to purchase their own houses.
The Federal Housing Administration was created as part of the National Housing Act of 1934. The goals of this organization are: to improve housing standards and conditions; to provide an adequate home financing system through insurance of mortgage loans; and to stabilize the mortgage market.
During the Great Depression, the banking system failed, causing a drastic decrease in home loans and ownership. At this time, most home mortgages were short-term (three to five years) with no amortization - gradual payment of debt. The banking crisis of the 1930's forced all lenders to retrieve due mortgages. Refinancing was not available, and many borrowers, unemployed at that time, were unable to make mortgage payments.
Consequently, many homes were foreclosed, causing the housing market to plummet. Banks collected the loan collateral (foreclosed homes) but the low property values resulted in a relative lack of assets. Because there was little faith in the backing of the U.S. government, few loans were issued and few new homes were purchased.
In 1934, the federal banking system was restructured. The National Housing Act of 1934 was passed and the Federal Housing Administration was created. Its intent was to regulate the rate of interest and the terms of mortgages that it insured. These new lending practices increased the number of people who could afford a down payment on a house and monthly debt service payments on a mortgage, thereby also increasing the size of the market for single-family homes.
In 1965, the Federal Housing Administration became part of the Department of Housing and Urban Development (HUD). Since 1934, the FHA and HUD have insured over 34 million home mortgages and 47,205 multifamily project mortgages. Currently, the FHA has 4.8 million insured single family mortgages and 13,000 insured multifamily projects in its portfolio.[1] The Federal Housing Administration is the only government agency that is completely self-funded. It operates solely from its own income and comes at no cost to taxpayers. This department spurs economic growth in the form of home and community development.
The Federal Housing Administration offers various types of housing loans. These include:
* Adjustable Rate Mortgages
* Fixed Rate Mortgage loans
* Energy Efficient Mortgages
* Graduated Payment Mortgages
* Mortgages for Condominium Units
* Growing Equity Mortgages
In order to qualify for an FHA housing loan, applicants must meet certain criteria, including employment, credit ratings and income levels. The specific requirements are:
* Steady employment history, at least two years with the same employer
* Consistent or increasing income over the past two years
* Credit report should be in good standing with less than two thirty day late payments in the past two years
* Any bankruptcy on record must be at least two years old with good credit for the two consecutive years
* Any foreclosure must be at least three years old
* Mortgage payment qualified for must be approximately thirty percent of your total monthly gross income
