The problem of interest-only mortgages maturing without borrowers having funds in place to repay the full amount due has been brought into sharper focus because house prices have fallen in many parts of the country since the financial crisis hit.This means borrowers have less equity in their home if they need to sell at the end of their mortgage term and may find it difficult to get a replacement deal.
Although the cost of an FHA-backed mortgage probably won't fall in 2018, access to funding may improve as lenders reduce or remove so-called "overlays", where an individual lender will require a higher credit score than the minimums that the FHA requires.
Borrowers with less-than-stellar credit should shop around for these more aggressive lenders.
The potential to claim compensation for being mis-sold their mortgage will be attractive to borrowers in this position, but it remains unclear how a borrower with an interest-only loan would come to think they were paying anything other than only the interest.'And once again, only a fraction of the problem's huge scale is visible above the surface.
With the banks' credibility holed below the waterline once more, what is starting with a trickle of claims could soon become a torrent.'Other forms of mis-selling being considered include people with interest-free mortgages being encouraged to take loans out against their property; extending the loan term without a customer's knowledge; and brokers not doing adequate checks to ensure a customer can afford the repayments should their mortgage run into retirement.
Here are the advantages of FHA mortgages in 2018: The FHA requirements for credit score and down payments are far lower than for conventional loans.
Borrowers can technically qualify for an FHA loan with credit scores of at least 580 and a down payment of just 3.5 percent, according to HUD.“While an FHA-backed mortgage with FICO 580 is theoretically available to borrowers, many lenders add 'overlays' on these minimum requirements,” says Keith Gumbinger, vice president of in Riverdale, New Jersey.A number of factors are involved with taking out a mortgage, the length of repayment, the interest on the loan and most importantly how much to take out in the first place.For a mortgage of £60k the costs of repayment can vary dramatically when the different criteria is applied.The sub-prime mortgage market has been in the spotlight before over dubious practices, with the Financial Services Authority finding in 2010 that some brokers were misleading potential customers with poor advertising materials.He also said that specialist sub-prime brokers who potentially mis-sold products could potentially avoid compensation by claiming to have had no knowledge of the criteria lenders look for when approving mainstream mortgages.Add lower down payment and credit requirements to the mix, and the fact that these federally-insured loans are assumable, and FHA mortgages are an attractive option to many borrowers.