Talkin Waukesha Real Estate Weblog

I met with a mortgage banker yesterday. It’s always an interesting scene when a couple of veteran real estate professionals get together. There is a mix of sympathy, empathy, trepidation (which includes head shaking), conjecture and resolve. If I could summarize these type of discussions, I would use two words….. “who knows”!!

In the mortgage industry, there are a few “Thank You, Lord” prayers going up because of a recent boom in refinances. I have heard the chorus from appraisers as well. What I found surprising, though, were the amount of FHA loans being done. In some cases 7 or 8 out of every 10 loans are being funded by FHA. Many people have heard of FHA before. Most would say, it’s some kind of government backed loan. In fact, the history is rather interesting.

Believe it or not, there have been other periods in the history of this country when the government decided to step into what were historically “private sector industries” to push things along. The year is 1934 and I shouldn’t have to tell you about the economic state of the country at that time. The Federal Housing Authority was formed. They ramped up their services again in the 1940’s to help returning war veterans finance home purchases.

In the 1950s, 1960s and 1970s, the FHA financed privately-owned apartments for lower income, elderly and handicapped segments of the population. In 1965 the Federal Housing Administration was placed under the purview of the Department of Housing and Urban Development (HUD). Many will remember what happened in the late 1970s…. interest rates soared and property values started to fall. FHA was instrumental in helping to steady the market by making emergency funding available.

So in the grand scheme of cycling economics, here we are again with a mortgage market that has been rebuked and restricted because of it’s wild ways. We have a real estate market that enjoyed the ride, but is now lost and confused. And, once again, in steps the government. THEY have the best financial deal in town. Their debt to income ratios are the most favorable, they require the lowest downpayment and their interest rates are good. If you don’t mind waiting six to eight weeks to close (on a purchase OR a refinance), FHA is a great way to go. Conventional lenders are still in the corner licking their wounds and are being very discriminating about who they will finance.

With all the talk about $Billion$, you may wonder how you can benefit, even if it’s only a few $thousand $. Spend some time on their website – http://www.hud.gov/ . It’s worth the visit