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The following
information is deemed to be accurate at the time of
input; however, lender and government guidelines do
change from time to time. Always check for changes or
additional requirements with your lender. Do not rely on
this information as your sole source. It is intended to
give you general information. While FHA was established initially on an experimental basis, it has now become a integral part of our housing industry. FHA's major goal over the years has been to put more people into better housing with sound methods of financing. To a large degree, they have accomplished the majority of these goals since 1934. Even though they only account for about 25% of the mortgages made nationwide each year, many of their innovative ideas have spurred the private lenders to adopt similar mortgage plans. Several major FHA innovations have led to the type of mortgage financing that we have available today. For example, FHA was first to use a fully amortizing payment rather than a large balloon type payment at the end of the mortgage. They were the first to lend 80% of the sale price when the custom was to lend only 50%-60%. They were the first to set minimum property standards to insure that if you received an FHA insured loan, you would be obtaining a decent property that was essentially safe to live in. They were the first to allow loans to be assumed without increasing interest rates, and they were the first to do away with the prepayment penalties if the borrower paid the loan off early. Here are a few interesting facts about FHA today. FHA loans do not contain
prepayment penalties and they do not have due. on sale
clauses. This makes most FHA loans fully assumable and
fully creatively financeable. However, lenders began
installing a partial due on sale clause after December 1,
1986. This clause requires that a buyer assuming the
existing FHA loan, must qualify if he assumes within two
years of the last purchase. On February 1, 1988, FHA
changed the partial due on sale clause to one year for
owner-occupants. The FHA loans become fully assumable
after the one or two year period expires. Investors
cannot assume FHA loans closed after 12/15/89. Also there
are no simple assumptions on loans issued after 12/15/89. |
