May 28, 2008 12:28 am US/Eastern
FHA Loans May Be A Homeowner's Salvation
MIAMI (CBS4) ―
The information in this report may be extremely valuable if you are one of those people with an adjustable rate mortgage, and you haven't been able to refinance. Making this one change could save you hundreds of dollars every month.
South Florida may be creating one of the most desirable skylines in America, but owning a home here for many isn't easy.
"With homeowners right now, it would probably be about a thousand three hundred," said Hialeah homeowner Pedro Martinez.
When Martinez bought his 900 square foot apartment three years ago, he took an interest only loan—like many—to keep his payments low.
But when that rate reset, "It went from $900 to $1400. I was pretty much in shock."
He tried to refinance for seven months, and not a single bank would write him a loan for his depreciating apartment.
He began to think it's time to foreclose.
"I thought of looking for something that was more cheaper, something I could afford," he said. "I have a lot of bills and it was definitely taking a toll."
Then he learned through a friend about Federal Housing Administration mortgages, also known as FHA loans.
"Right now I would say our business for FHA loans have gone up about 40 to 50%," said Peter Rodriguez of Popular Mortgage.
FHA loans have been around for years, but are so popular now because they are saving South Florida homeowners, such as Pedro.
You can borrow up to $423,000, at typically a lower interest rate than a bank will give you. Even with a credit score as low as 580, all you have to put down is 3%, a steal when most banks are requiring as much as 25% down.
The downside is that there is a lot of paperwork involved, and these loans take longer to get. For Pedro it was a small price to pay, to save $300 every month.
Not all banks and mortgage brokers can write these loans. They have to be FHA approved, so do your research.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
Forbes Lists Stars Worth Their $$$
Click to enlarge
Stumble It!
