There are times when people would want to have their loans insured because they are not sure if they would be able to pay for the home loans every month. While it is true that lenders usually check if the borrower has enough income to pay off the amount being borrowed, there are always some instances wherein people would have to use the money for the mortgage for more important things. If the borrower would not be able to pay off the loan, it might become a problem but having home loan insurance with FHA may change that entirely.
When the time comes that the borrower will not be able to pay the fee of the lender, the FHA will be in charge of paying for the fee. The FHA usually gets the money from the monthly fees that would be paid for by the borrower as well. One of the most common mistakes that people do is that they think that once they are approved for the home loan program of the FHA, they do not have to pay for anything anymore. Do remember that the FHA home loans in California are meant to be paid for.
There are instances wherein people who have bad payment records still apply for FHA home loan programs in the hope of getting approved. While there are instances when the FHA approves loans of people with previous bad payment records, the person would first have to prove that he has improved with paying off loans and other types of debt. One of the things that the FHA checks is the credit card payment record. If you have problems with your payment record but would like to apply for an FHA home loan program, you may want to improve your record first so that your chances of getting approved will become higher.
The FHA recommends Consumer Credit Counseling Program to those who feel that they may be denied because of their previous bad payment record. The program is designed to guide and help people make better choices with their credit card payments and other billing that they failed to pay on time in the past. You may also want to hire your very own credit counselor to help you in making your credit card score better step by step. It might take some time but it will be all worth it in the end.
Admittedly, it may be a bit hard for people who have grown accustomed to paying everything with their credit card to start improving their credit card record and this is the reason why people should sometimes hire professionals to guide them and to help them resist making big ticket purchases that may further ruin their chances of getting approved.
While the FHA is popular and may help a lot of people, you should still remember that it is not for everyone. There are some people who are better off not getting insurances in their home loans because they can pay for the mortgage every month. Most of the time, those who apply for home loans are first time homeowners, people who cannot pay for the upfront down payment and families with low to moderate monthly income.