FHA Loans About to Get More Expensive For Atlanta Borrowers

FHA loans were designed to make housing possible for more Americans. So what happens when they become more expensive?

Borrowers will soon find out, say Atlanta bankruptcy attorneys. The Federal Housing Administration recently announced plans to hike premiums for the government-insured loans by one quarter of a percent. It might not sound like much, but the increase comes just months after FHA raised its down payment requirement from 5 to 10 percent and added a minimum credit score of 500. It all adds up to make an affordable loan just out of reach for some homebuyers.

Back in 2005, FHA loans were used in just 5 percent of all home purchases. Today, following the credit tightening and financial squeeze of the recession, that number has jumped to 30 percent.

Obviously Americans are in need of home-buying help. Unfortunately, the FHA program needs help, too. Reserves recently dipped below the Congress-mandated minimum, so the administration really has no choice but to raise prices.

For most homebuyers, paying an additional $400 a year - about what the premium increase equates to - will still be manageable, if not exactly welcome. Besides, FHA loans still have lower credit score and down payment requirements than the Freddie Mac and Fannie Mae alternatives.

If you find that you can't qualify for a government home loan, however, maybe it's time to figure out why. Often times, the credit and money issues that prevent borrowers from qualifying for a loan are caused by overwhelming debt. By lowering debt, you may be able to boost your credit score, put more money in your pockets, and yes, even buy a home or refinance the home you already own. If you have too much debt to handle alone, bankruptcy is often the best solution. Learn more about bankruptcy - and how it affects home ownership - when you try a free one-on-one debt analysis with an Atlanta bankruptcy attorney at DebtStoppers.

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