In This Article
- Home Affordable Act
- FHA Loans
- VA Loans
After the collapse of the housing market, more and more homeowners have been struggling to afford their monthly mortgage payments. To help alleviate some of the impending stress this has caused the federal government has partnered with banks and lenders to help guarantee home loans. This allows more borrowers to become approved for home loans. The goal is to encourage lenders to approve borrowers while also providing a home loan options to borrowers who have less than perfect credit all while doing so with lower monthly payments and low-interest rates. If you’re a homeowner in a similar situation, it would be beneficial to educate yourself on the details pertaining to VA, FHA, and other home loan options.
The Making of the Home Affordable Act
If you’re struggling to make your monthly mortgage payments, this government program was designed to help you with refinancing or modifying your current loans and payments. The Obama Administration created the Home Affordable Act in 2009 which offers two assistance programs to borrowers.
- The refinance program- helps you refinance your mortgage into a new one with lower payments and interest rate.
- The modification program- helps if you’re struggling due to mortgage increases or if you have a drop in income. This program will help avoid foreclosure by making your monthly payment more affordable.
An FHA loan is actually not a loan at all. It’s actual a guarantee from the FHA to the lender. It’s used when a borrower has poor or bad credit and limited financial resources. This program ensures the lender is covered in the event the borrower defaults on their loan. The FHA loan offers the lenders confidence in accepting the risk that comes with a less than perfect borrower and it can also offer lower down payments and refinance abilities.
VA loans is a home loan program available to veterans of the armed forces. These loans were designed to help service men and women find affordable housing after their time in the military has been completed. VA loans are much like FHA loans and you’ll still need to go through a lending source, but the VA home loans are backed by the Veterans Administration instead of the Federal Housing Administration. The VA also offers loans with no money down.
To be eligible for a VA loan you need to have served for a specific amount of time and left under any circumstance other than dishonorable discharge. The VA will back up 25% of your home loan and you will need to request a COE from the VA and bring that to your lender to start your qualification process.
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