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Posts Tagged ‘Federal Housing Administration (FHA)’

Federal Housing Administration (FHA) Loans are not loans from the government; rather they’re a promise from the government that you’ll pay your loan for a lender. For several people, an AZ FHA loan makes the difference between getting a loan for a house and not getting one. Sub prime loans are loans that are direct from the lender and are based solely on your credit and history and do not offer great interest rates like a prime loan or a regular home loan. Sub prime loans are designed for home buyers who do not qualify for a regular or prime loan or who do not have a strong, good credit history.

Sub prime loans charge a higher interest rate because the risk the lender is taking on the borrower. Due to the fact that the borrower does not have a very strong or very good credit rating or history, the chance that they’ll default (fail to pay) on their loan is much higher.

An FHA loan insures the lender against this high risk borrower, which benefits everybody. The lender is insured that the loan will be paid and the borrower can get better rates of interest by having an FHA secured loan. Read the rest of this entry »