Are FHA Loans Only for First-Time Homebuyers?

The short answer: Definitely not!!

Sep 1, 2014 at 1:05PM

Whether you are a a first-time homebuyer or a veteran of two or more homes, the FHA has programs that can help just about anyone improve mortgage terms and expand financing options. FHA loans are for anyone -- first-time homebuyer or not.

What can the FHA do for you?
The benefits of pursuing an FHA loan are numerous, and can be very powerful tools for any homebuyer.

Fha Public Domain

Source: FHA

Did you file bankruptcy more than two years ago? That would be a major issue at almost any bank. With an FHA loan, that's not a problem.

Was your home foreclosed on more than three years ago? Again, that's not a problem with the FHA, even though it's a deal breaker for many conventional mortgage lenders. The FHA provides more lenient terms for borrowers with shorter work histories, self-employed individuals, and those with higher debt levels than typical banks would accept.

All that, and we haven't even mentioned the most well-known feature of FHA loans -- the 3.5% down payment. For many homebuyers, it could make more sense to pay less down and keep their cash invested, or in reserves for a worst-case scenario. With the FHA, that's possible, but with other lenders, it may not be. That 3.5% down payment, by the way, is available to all FHA borrowers, not just first-time homebuyers.

Buying A House Imagesmoney Flickr

Image Source: Images Money.

The only catch for experienced homebuyers: you can only have one outstanding mortgage with the FHA at any given time.

What exactly is an FHA loan, anyway?
FHA stands for Federal Housing Administration. The FHA was created in 1934 in order to stabilize the mortgage market, raise the standard of living in the U.S., and ensure adequate home financing options for the nation's citizens.

The FHA doesn't actually originate "FHA loans." Instead, it provides insurance to lenders on loans originated that meet the FHA's standards. In this way, borrowers reap all the benefits of an FHA loan, while banks and lenders benefit from the extra protection of the FHA's insurance.

When the credit crunch hit markets in 2008 and 2009, traditional mortgage lending all but dried up. It was only the government guaranteed programs -- like an FHA loan -- alongside lending backed by Fannie Mae and Freddie Mac that existed. At the peak of the crisis, FHA loans as a percentage of all U.S. mortgage loans skyrocketed from about 2% of loans to nearly a third.

The Foolish bottom line
Whether you're considering your first home purchase, or you already have bought and sold multiple properties, the FHA is a viable option for your home financing needs. The government agency allows banks to offer much more favorable terms to borrowers as part of its mission to raise the standard of living across the U.S.

If you're in the market to buy, at the very least, an FHA loan is worth considering.

And you can take advantage of this little-known tax "loophole"
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Jay Jenkins has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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