Here's one instance where "your tax dollars at work" really will mean something to you.
Thanks to several innovative programs sponsored by Uncle Sam, it's possible for the little
people to own a piece of the American Dream. The programs are so successful that almost 60%
of all families in America now own their own homes.
FHA Loans
The Federal Housing
Administration (FHA) is a federal agency within the U.S. Department of Housing and Urban
Development (HUD). FHA's primary objective is to assist in providing housing opportunities
for low- to moderate-income families. FHA has both single family (one to four units) and
multifamily (five or more units) mortgage lending programs. The agency does not generally
provide the funds for the mortgages, but rather insures home mortgage loans made by private
industry lenders such as mortgage bankers, savings and loans, and banks.
Home owners with FHA loans
usually only have to make a small down payment (about 3% of the value of the home). They
also enjoy a lower interest rate, between 0.5% and 1% below the interest rates on other
mortgages. The down side is that they do indeed have to purchase private mortgage insurance,
or -- as it's called under these loans -- mortgage insurance premium (MIP).
VA Loans
The more you know about loan programs, the more you will realize how little red tape there
is in getting a VA (Veterans Administration) loan. These loans are often made without any
down payment at all, and frequently offer lower interest rates than ordinarily available.
Aside from the veteran's certificate of eligibility and
the VA-assigned appraisal, the application process is not much different from any other type
of mortgage loan. What's more, if the lender is approved for automatic processing, as more
and more lenders are, a buyer's loan can be processed and closed by the lender without
waiting for the VA's approval of the credit application.
Rural Home Buyers
Special loans also exist for people choosing to locate in a rural area. These loans are
given to encourage economic development in depressed regions. The specifics of the program
are similar to the FHA loan program but may not be as stringent with the income
qualifications.
You'd be surprised, though, at what's considered a "depressed region." You can sometimes
find these loans available in very nice areas that for one reason or another have managed to
qualify. Be sure to ask if such a program exists in your area.
No matter what kind of loan you end up getting, though, there will be tax implications -- generally positive ones.