A closer look at the evolution of US home funding.

How many of you could actually afford to buy a house, without borrowing a home loan? None, I guess. In this age of economic meltdown and post recession hangover, it’s simply impossible to purchase a house without the help of a home loan. However, since home loan is the largest investment, you would ever make, you must gain as much information as possible about home loans, before investing in it. If you like to make this investment a success, you must attempt to know the home loan history first. Remember, once you get a clear idea about the different types of home loans, it would be easier for you to choose the best possible option for yourself. Read on to know a detailed study of the origin and the gradual evolution of home loans.

Origin

Initially, those, who like to buy a house used to borrow money from traditional lending institutions like bank, credit union or other private financing company. The origin of home funding could be traced back in 1938, when President Franklin Roosevelt took the initiative to launch the Federal National Mortgage Association or popularly known as “Fannie Mae,”. “Fannie Mae,” aimed to provide financial assistance to the common men, who had a limited income but could not afford to buy their own house. However, “Fannie Mae,” got some serious competition, when in 1970 Federal Home Loan Mortgage Corporation or in short ‘Freddie Mac,’ was established. Both these organizations were initially run by the government but they are privatized now.

Historical influence

The historical events like World War II also play a crucial role in the growth and popularity of the home loan financing concept. After World War II, a huge number of American citizens, who took part in the war, returned their homeland in the hope of a peaceful shelter, home. Since they badly needed a house of their own, in 1944 under the Serviceman’s Readjustment Act, Public Law 78-346 came into force. Under this law, veterans could borrow loans for purchasing or building a house. Later on, new amendments were introduced in the act, under which, people who took part in wars like Korea, Vietnam or Gulf wars can enjoy some extra privileges, while borrowing a home loan.

Final thought

Home loan certainly comes with a lot of perks. With the help of a home loan, nowadays millions people can afford to own their house. However, with the current slump and topsy-turvy situation in the housing market, many home loan lenders have tightened their lending criteria and credit standards. Therefore if you like to apply for a home loan, you have to make a little preparation first. Although the aforementioned points are true and the interest rates and terms offered by different home loan lenders vary a lot, a prospective homeowner can secure a home loan quite easily here. Lastly, no matter what you choose traditional or VA, Fannie Mae, and Freddie Mac, make sure you remain aware of every possible home loan options, before signing the dotted line.

A guest post from Marlon

FHA Home Loans

First time home buyers no doubt understand the virtue of being patient.  Saving for a down payment, working to build great credit and searching high and low for the perfect home, the process of purchasing a home can sometimes be a difficult and time consuming process.  Why would home buyers then take the fast and easy way out when it comes to their home loan?  Those who have taken the time to ensure that they have found the perfect home and are financially ready for the responsibility of owning a home will more than likely take their time when looking around for lending on their home loan.

 

There are several home loan options available for home buyers, and it pays to take your time to speak with different lenders and discover what your options are.  One of the less known options is an FHA Home Loan. An FHA home loan is a loan that is insured by the Federal Housing Administration, and provides certain benefits for home owners to make it easier for them to be able to afford a home.  With an FHA home loan, your down payment can be as little as 3.5%, and your closing costs and fees can be included in the loan.  In addition to low monthly interest rates, there is a monthly insurance premium associated with this type of loan, which is financed by the lender and included in the monthly payments of the home loan.

 

FHA Home Loans are a fantastic option for home buyers who feel they cannot afford private mortgage insurance.  Because an FHA home loan includes the cost of monthly insurance that is provided by the FHA, the buyer will have no trouble finding mortgage insurance and will be locked in to a low rate fee and be insured by the federal government.  In addition to the low down payments and closing costs, you can refinance your home loan with an FHA loan to receive money to make home improvements such as remodels or making your home more energy efficient.  This combines all the costs of repairs and upgrades with your current home loan and brings you ease of use and convenience as you still only have one payment.

 

The Federal Housing Administration does not issue these loans themselves; they simply insure them and help people find housing opportunities and enable people to afford a home more quickly.  In order to get an FHA home loan, a home buyer must find a licensed and approved home lender who is qualified to deal in these particular loans.  Because the FHA does not issue these loans, various lenders are able to set their own interest and closing rates.  Shopping around is imperative with this type of loan, as even a small change the interest percentage rate can increase or reduce your loan payment by thousands of dollars over the life of your loan.

 

If you are in the market for a new home, consider an FHA Home Loan when looking for lending.