When the Great Depression hit in 1929, millions of Americans began to loose their homes to foreclosure. Short term mortgages (3-5 years) and balloon payments were common. The banking crisis during the 1930s forced banks to call in loans, and there were no refinancing options for the average homeowner. As a result the federal banking system was restructured and in 1934 The National Housing Act was passed.
This legislation created the Federal Housing Administration (FHA) with the intent to regulate interest rates and mortgage terms on the loans that it insured. The agency purchased mortgages and insured them, allowing banks to turn around and make another loan without putting out substantial capital of its own. In 1965, the FHA became an arm of the newly formed Department of Housing and Urban Development. Since 1934, the FHA and HUD have insured over 34 million mortgages.
In today's real estate market, FHA loans have become a great option for potential buyer's due to the low down payment structure. With only a 3% down payment required, FHA loans make buying a home much more affordable.
In Delaware, FHA loans are a very strong asset in the real estate industry. Many people are able to use these loans to get in to a home with out nearly as much money out of pocket as they once needed with a convential mortgage. Delaware has also started some FHA backed first time home buyer programs. These programs give first time buyers in Delaware the oppoetunity to purchase a home with No Money Down and in some cases no closing costs either.
If you would like more info on FHA loans or the Delaware first time homebuyer programs that are currently available, contact the Dream Team today.
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