FHA-Backed Loans Offering Mortgages With Little or Nothing Down

Mortgages that allow consumers to put little if any money down when buying a home have largely disappeared as a financing option available from private lenders. But they are still available -- and growing more popular -- through a government-backed program.

That's raising concerns among critics who blame no-money-down mortgages for many of today's housing market woes. And while federal housing officials are moving to end the practice, for now home builders are promoting the programs to move unsold inventory.

The offers -- including "100% financing" -- are made possible due to down-payment assistance programs run by nonprofit organizations. These programs are funded largely by home builders and also by private homeowners desperate to sell. The seller-funded groups provide enough down-payment money to buyers that they can qualify for a mortgage backed by the Federal Housing Administration, which requires at least a 3% down payment.

I don't have a problem with nothing down programs as long as the buyers have sufficient income to make the payments and sufficient reserves in case of an emergency. The real problem is not nothing down, but nothing down with adjustable ARMs.

To be sure, the overwhelming majority of subprime loans in default are adjustable-rate mortgages. FHA-backed loans, including those with down-payment assistance, are fixed-rate loans with income verification requirements, which have better track records.

Source: By Ideal Investment Corner http://idealinvestment.blogspot.com/

Here we go the recent news, prices of homes nationwide are still down 15 percent. "The Case Shiller Housing Price Index fell 15.3% year over year (yoy) last month, the largest drop in the survey’s existence. The biggest losers continue to lose big, with markets such as San Diego, Miami and Las Vegas posting the largest gains. Every market in the 20-market survey lost over the past month. Charlotte was the “winner” with only a .12% decline in prices yoy." Reports Blown Mortgage.