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FHA and the Subprime Lending Alternative

Many loan professionals consider a FHA home mortgage as a type of a subprime mortgage. The fact is that finding a no down-payment home loan for borrowers with less than perfect credit is not as easy as it once was. However, while both FHA mortgages and subprime programs are designed to help those that could not normally afford a home get on the market for one (such as those with poor credit), there are important differences that should be considered. One of the key differences between FHA mortgages and traditional subprime loans is that FHA financing is insured by the U.S federal government. So basically, our tax dollars are being used with these government-backed home loans. The FHA was created during the Great Depression to help Americans become homeowners and the program has been helping borrowers with challenging situations get financed ever since.

After the subprime debacle in 2006, FHA mortgages are in fact one of the last option for subprime, as many lending practices were cut off as a result of the housing bubble. A subprime mortgage can definitely help those who want a home afford one, but one of the only subprime lending techniques still in practice is the FHA loan, although it is certainly a safer practice.  Read the Original article > The Truth behind Subprime and FHA Loans.

Posted in FHA Mortgage News, Subprime mortgage news.

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