FHA loans are one of the most popular loans with borrowers today - and not just because they are insured by the federal government from default. Wait - you don't think that that helps you if you are a borrower, do you? It doesn't. A few of the people that I speak with about FHA loans think that the FHA insured loan will benefit them somehow - but the fact that a loan is insured by FHA actually does the borrower no good. FHA insures the loan in the event of a default by the borrower, the lender gets paid from the FHA insurance fund. Sorry for the bad news on this one, but at least we were able to clear up that confusion.
So FHA loans are popular because they have a low down payment, relatively flexible underwriting guidelines and low fixed rates -- among a few other reasons. When people ask me what the advantages are to an FHA loan, here are just a few of the things that I talk about as to why an FHA loan may be right for them:
Oh, and now we are all clear on the FHA insurance thing -- and who exactly it benefits: the lender.