What You Need to Know About FHA Loans and FHA Secure

The FHASecure Program has been created as a way for the government to help rescue hundreds of thousands of borrowers from foreclosure due to adjustable rate loans that are going up. FHA doesn't make loans ? it insures them against default. That helps protect lenders and can make them more willing to make a loan they otherwise might decide is too risky.

But it is doubtful that the program will make a huge dent in the number of rising foreclosures, for a number of reasons, including:

Maximum loan size amounts, which are far too low for some areas of the country. There is an effort to pass legislation that will raise the loan limits, but it probably won't be enough for those in areas with very high housing costs.
You must have at least 3% equity or cash in your property. But many borrowers now in trouble bought their homes with little or no money down, and now that home prices have gone down, they owe more than their homes are worth.
FHASecure is aimed at borrowers with strong credit histories. While it's true that some subprime borrowers were steered into bad loans when they could have qualified for better ones, many have less than perfect credit.
You must be able to show stable employment and sufficient income. Borrowers who got a mortgage using "stated" or "no doc" loans may find it impossible to document enough income to refinance. Those who have also lost their jobs or been downsized will have trouble: some 88,000 jobs have been lost this year in the financial sector alone. If you are self-employed, you will have to be able to show enough income to qualify for the loan.
FHA loans charge a mortgage insurance premium (MIP) which is added to the monthly loan payment, increasing the cost. FHASecure will be moving to "risk based premiums" in January 2008, which means a higher expense for higher risk borrowers ? and typically those are the consumers who are the most strapped.
If you bought an investment property or second home, FHASecure is not for you.

Borrower beware: Many homeowners have adjustable rate mortgages when they could have qualified for less risky fixed rate loans. That includes many subprime borrowers who would not be facing the possibility of foreclosure if they had found the right loan. Until recently, however, it's been impossible for consumers to search the best loans directly without relying on a loan officer.

Lender Rate Match offers a service that allows you to search and compare the best loan rates from multiple lenders, in seconds. You will be matched with a single lender who wants to match that best rate. Loan results are available from subprime to prime.

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