FHA has played an important and vital role in the mortgage marketplace for over 75 years. Since 1934 the Federal Housing Administration has helped over 33 million families realize the dream of home ownership.

The National Association of Realtors has long maintained that the principal barrier to homeownership is saving the money needed for the down payment and closing costs. Since FHA loans only require a 3.5% down payment, many families have taken advantage of this program to help them purchase their first home. Even though Wildwood properties have experienced downward pressure on pricing, prices are still too high for young families who wish to stay in the area in which they were raised. FHA loans are the only way that many of these families can achieve their goal of owning a property at the Shore. And that’s the most important reason why the FHA needs to be bolstered so that it can continue to provide these families with an avenue to realize this most basic goal for so many Americans.

Like other social programs such as Social Security and Medicare, the Federal Housing Administration has suffered from the current economic crisis, 30-year old technologies, and limited staffing resources. Although it’s capital reserves have fallen below the congressionally mandated level of 2 percent, the FHA does have a separate cash reserve making it’s actual reserves higher than they’ve ever been. But because the FHA plays such a vital role in helping families achieve homeownership, congress must take steps to see that the program is strengthened and supported.

In 2010, FHA announced major changes to ensure its long-term financial soundness, including:

• The upfront mortgage insurance premium will increase but may be financed.
• Borrowers with a credit score below 580 will be required to have at least a 10% down payment (the minimum down payment will remain at 3.5% for all other borrowers).
• FHA will seek legislative authority to increase the annual premium (currently capped at 0.55 percent).
• Seller concessions will be reduced from 6 percent to 3 percent.

One of the biggest misconceptions is that many people think that FHA loans are
are only available for first time buyers. In fact, first time buyers, repeat buyers, or even people interested in refinancing may qualify for an FHA loan so long as the purchase is for a principal residence and the buyer can prove citizenship.

For more information about FHA loans, and how they may be able to help you buy your Wildwood property, contact RPO Realtors.