Last month, FHA mortgages became increasingly popular, according to statistics released by the Department of Housing and Urban Development last week in the FHA Outlook Report. In March, there was a 68% increase from the previous month in the number of FHA mortgage applications, with 246,406 applicants applying for this type of financing. This increase applied to both new homeowners purchasing a home with an FHA mortgage (about two-thirds of the applicants) and current homeowners refinancing their mortgages to get lower interest rates and/or change their loan terms.

Why the Sudden Increase in Applications?

Many speculate that the recent jump in FHA mortgage applications was due to the Home Buyer Tax Credit for first-time home buyers and existing homeowners. The tax credit, which ends this Friday, was a huge incentive for home buyers, and many rushed to buy homes in March before the upcoming deadline. First-time homebuyers who sign a purchase contract for a home before April 30 and close before June 30 can receive up to an $8000 tax credit. Existing homeowners who buy a home can receive up to a $6500 tax credit.

Another possible reason for the increase in applications could be related to the recent increase of the upfront mortgage insurance premium required by the Federal Housing Administration. The mortgage insurance premium increased from 1.75% to 2.25% on April 5. In the last week of March, many prospective home buyers may have bought homes in order to beat the increase so that they could avoid paying more upfront costs.

Receive Benefits by Financing with an FHA Mortgage

It is not too late for prospective and current home buyers to take advantage of the home buyer tax credit. First-time home buyers can use the tax credit along with an FHA mortgage to buy a home and increase their savings! Purchasing with this type of financing has multiple benefits, including low rates, a low down payment and lenient eligibility guidelines. The low down payment means first-time home buyers can have more money to spend on the various other expenses related to buying a new home.

According to the statistics in the aforementioned FHA Outlook Report, there were 43,600 refinances in March, and 28,596 of those were homeowners refinancing their current non-FHA mortgages into FHA mortgages. They no doubt realized the multiple benefits of refinancing with this type of loan. These benefits include securing a lower rate, which can lower a homeowner’s monthly mortgage payments, and other refinance options that allow a homeowner to change the terms of the loan, receive cash or consolidate his or her debt.

Even with the current economy, the HUD statistics showed that the number of delinquent FHA mortgages declined slightly in March. This is good news because it shows that homeowners are finding ways to pay their mortgages. For those who are still struggling to pay their mortgages, there are programs available that can help them get out of their financial rut, such as the FHA’s foreclosure prevention methods. For homeowners with other types of mortgages, refinancing to an FHA loan could reduce your monthly and long-term expenses. This type of financing is becoming a solution for more and more borrowers because of its multiple benefits and lenient requirements.

Those interested in applying for this type of financing or who want to take advantage of the tax credit should speak with a loan specialist to learn more about their options!

Author Bio: Victoria Belle-Miller is a member of the FHAMortgagebank.com writing staff. Her background in journalistic writing and ability to evaluate the issues that Americans face in daily life make her a strong addition to the FHA loans team and a valuable source of mortgage advice!

Category: Finances
Keywords: FHA mortgages, foreclosure, HUD, home loans, tax credit, bad credit, first time home buyers, loan applications, monthly payment