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FHA Reports Sharp Increase in March Mortgage Applications

by Karen Lawson
April 22nd, 2010

The Federal Housing Administration (FHA) reports a 68% increase in March 2010 home loan applications over February. Applications for FHA home loans, refinance mortgage loans, and HECM (reverse mortgage loans) increased during March.

FHA Loans’ Popularity Increasing as Tax Credit Deadline Approaches

The federal tax credit deadline requiring buyers to have a home under contract by April 30 may be adding to the popularity of FHA loans. Offering low down payment, flexible underwriting, and more lenient credit requirements, FHA loans assist first time and moderate income buyers with affordable home financing options.

FHA Loan Applications: Good News for Housing Markets

FHA home loan applications increased from 165,239 in February to 246,406 in March, an increase of approximately 68%. Of these, 163,467 were applications for home purchase loans, and 75,541 were applications for mortgage refinance loans, and 7,398 were applications for Home Equity Conversion Mortgages (HECM), which are often called reverse mortgage loans. FHA notes that the pending expiration of homebuyer tax credits and the increase in FHA up front mortgage insurance premiums (UFMIP) likely contributed to the surge of FHA applications in March.

FHA Refinancing: Converting Conventional Mortgage Loans to FHA Loans

In addition to its popular streamline refinance program for FHA borrowers refinancing to new FHA mortgage loans, FHA loan applications showed a strong trend of conventional mortgage borrowers refinancing to FHA loans. Of 75,541 refinance applications received in March, 17,356 were FHA to FHA refinance loans, while 58,185 were conventional to FHA refinancing applications. Homeowners who cannot qualify for refinancing with conventional lenders may find that FHA mortgage programs offer an affordable alternative.

FHA Refinance Programs Offer Relief

If your existing home amount is more than 80% of your home’s current value, an FHA refinance loan may provide lower mortgage rates, converting your current home loan from an adjustable to fixed rate (ARM) mortgage. Refinancing with FHA can help you escape unusual mortgage features and convert your home loan to a fully amortizing mortgage with stable P&I payments. Refinancing to a n FHA insured fixed rate mortgage (FRM) can help with reducing mortgage rates, payments, and can also help you pay off your mortgage loan faster.

If you already have an FHA loan, the streamline refinance program can help you refinance with minimum loan documentation. Call your mortgage lender or an FHA approved lender for more information.

FHA approved lenders can help you find home loans or refinancing opportunities best suited to your circumstances.

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