One of the main things that holds people back from purchasing their first home is saving up the down payment. A few years ago before the subprime mortgage crisis hit the housing market hard, it was a little easier to save up a down payment for a home because you only needed a fraction of what you need these days. Fortunately, there are ways to get help.

An FHA, or Federal Housing Administration loan is a great way to realize your dream of owning your own home by getting help with your down payment. An FHA loan is more flexible than a conventional mortgage in several ways. For one thing, buyers only need to put up about 3.5 percent of the down payment on the home instead of the 20 percent that is typically required for a conventional mortgage loan. An FHA loan is also more flexible with the homebuyer’s credit history. Since the mortgage loan is backed by the federal government, you don’t need to have impeccable credit in order to qualify for an FHA loan.

In addition, homebuyers who get an FHA loan are not charged higher interest rates even if they have a poor credit history. You only need to have a credit score of 500 in order to qualify for most FHA loans although in some circumstances you may need to have a score of at least 600. Even a 600 score is low compared to the requirements of a conventional mortgage loan.

FHA mortgages are also more lenient with your credit history. You can have a higher debt-to-income ratio and still qualify for an FHA loan. With a conventional mortgage, you would be disqualified if your debt-to-income ratio was above 45 percent. Many borrowers are approved for FHA loans with ratios above 50 percent.

The last advantage of an FHA loan is that they often offer rates below that of a conventional mortgage. I checked BestCashCow's mortgage rate charts and found that a conventional 30-year mortgage in MA with 0 points had a 4.793% APY. An FHA backed 30 year loan in MA had a 4.629% APY.

With all of these advantages, you may be asking yourself, “What’s the catch?” The main drawback to an FHA-backed loan is that you are required to pay mortgage insurance, which increases monthly payments. This insurance protects the bank’s investment in the property. This insurance is similar to what convenetional mortgage borrowers must pay if their down payment is less than 20%. In most cases, you can have your insurance premiums rolled into your mortgage payment so you don’t even have to think about it each month – it just automatically gets paid along with your mortgage. There are also borrowing limits to FHA mortgage loans. These limits vary by state and even by town and by the type of dwelling purchased (single family, two family, etc.) Take a look at some of the limits for Massachusetts.

If you have been struggling to save a down payment for a home and trying in vain to improve your credit score to the high expectations of a conventional mortgage, consider an FHA mortgage. It may be a good last resort.

During the 2008 mortgage and housing crisis, the federal government bailed out Freddie Mac and Fannie Mae – the two largest mortgage backers in the nation. But current proposals by President Obama and the federal government would phase these two companies out and make the private sector assume more of the risk of potential losses when mortgages default and homes get foreclosed on. Is this the reform that is needed? And if it passes, will the housing industry suffer even more than it already has?

There is no question that something has to be done in the mortgage industry. However, the reform that is being discussed would likely lead to increased mortgage rates. The historically low mortgage rates are what helped make the industry experience an upswing in sales as more buyers were willing to buy a home at such a low rate. But once those rates go up, fewer buyers are going to want to buy a home because of the added cost and interest they will have to pay over the course of the loan.

Freddie Mac and Fannie Mae guarantee around half of the mortgages in the country. That equals out to about $5 trillion spread over 31 million homes. But if the current proposals pass through the legislature, buyers would need to come up with a larger down payment before they can even be considered for a home loan. In a time when unemployment is at record highs and the economy is so uncertain, who will want to put up 10 or even 20 percent of a down payment to move into a home? And even if they wanted to, who could afford to do that these days?

According to Mary Tingerthal, the Minnesota Housing Finance Agency commissioner, the current system in which Fannie Mae and Freddie Mac secure mortgages for buyers, is a good system that was abused a in the last several years which led to the mortgage crisis a few years ago. But if that system is dismantled like the federal government is planning to do, it would be bad news for the mortgage industry overall.

Other analysts agree with her. The negative press that Fannie Mae and Freddie Mac has received in the last couple years, however, is going to scare many people away from these two mortgage giants if something is not done. However, as with anything that occurs with the federal government, nothing is going to happen quickly. Members of Congress have discussed the ramifications and the benefits of this mortgage system overhaul but it will likely be weeks or even months before something actually gets voted on. And even then, the changes will probably take months or years before taking effect.

How do you feel about the proposals for reform that are being discussed? Do you think it’s good news for the mortgage industry or will these proposals simply create more problems?

If you’re like the overwhelming majority of people who tried to participate in the government’s Home Affordable Modification Program, you didn’t get the help you were seeking. Only 25 percent of those who sought financial help with their mortgages received some form of assistance under a program that was heralded as one that will almost solve the housing crisis. More than 2.5 million homeowners tried to get assistance so they could stay in their homes, but only 1 in 4 of those actually received that help. So what happened?

One of the reasons so few people received help was because they did not qualify. That’s understandable in some respects. Unfortunately, thousands of homeowners were disqualified from participating in the program after they were initially accepted into it. They got their hopes up and then they were dashed several months later only to find out in many cases that they had to pay the back payments on their mortgage or else face foreclosure.

The original idea of HAMP was to lower interest rates and lengthen the term of the mortgage loan for homeowners who were not able to make their payments. This was supposed to cut down on the number of foreclosures occurring throughout the country. As a result, the taxpayers would have a smaller bill to pay. Currently, the government has only spent $1 billion out of the $75 billion allotted for the program.

The program is not without its faults and problems, either. According to Neil Barofsky, the current overseer of the program, the guidelines were unclear for qualifying for the program. As a result, there was a great deal of confusion which caused major delays in helping people and implementing the program as effectively as many had hoped. He went on to say that HAMP “continues to fall short of any meaningful standard of success.”

Others are criticizing the program, too. Republicans in the house have said that HAMP is a waste of money and they are trying to come up with proposals and programs that will be more helpful for troubled homeowners.

Currently, HAMP is designed in a way that encourages mortgage servicers to modify mortgages for people who are having problems making their payments. If a homeowner is accepted into the loan modification program, they have a three-month trial period in which they must make their payments on time and in full before they are placed permanently into the program. But 1.3 of those homeowners were rejected before even entering into the trial period. The majority of those who were rejected were disqualified because they didn’t submit the appropriate paperwork. Others were denied because their mortgages were deemed “affordable” based on their pre-tax income.

Regardless of how you look at it, HAMP has helped hundreds of thousands of troubled homeowners. And while there are still hundreds of thousands of them looking for help, I’m sure the ones that it has helped are extremely grateful for the program. Let’s hope it can just stretch further and help even more people or let’s hope another system is instituted that can help those who need it.

Have you been having problems paying your mortgage bill each month? If so, have you considered refinancing? Refinancing might seem like a weird decision when you can’t afford your payments, but if you can refinance your mortgage loan into a longer term, the monthly payments would be less than what you are paying right now.

Extending the term of your loan has one major benefit: It can free up some cash each month that you can use to pay other bills. If you don’t have any other bills, at least your monthly house payment is lower and you can apply some of that extra money you have left over to your mortgage. If you are trying to save for retirement or some other important life event, you can use the leftover money for that as well.

While this benefit may be something that will help you right now, it is also important to consider the drawbacks to extending the life of your mortgage term. The biggest drawback is that you will be paying on the loan longer than you normally would. While your monthly payments would be reduced, the interest you pay over the term of the loan would increase. This means that over the extended period of your loan, you could be paying thousands more than originally planned. Of course, you can always opt for an extended mortgage loan in a refinance and then pay it off earlier if your financial situation improves.

Another drawback is that you will lose equity in your home if you plan on selling it in a few years. With the closing costs and other fees involved in a refinance, you will not be able to recoup those costs unless you stay in your home for at least five more years and rebuild the equity.

According to many people in the mortgage industry, an extended mortgage is the answer to many money troubles. Whether you have just been laid off from your job, need some money to make some major repairs on your car or if you have incurred a sizeable medical bill, refinancing into a longer term can help you dig out of the hole you are in and get back on track. It is better to opt for a longer mortgage and pay a little more in the long run than to lose your home because you can no longer make the payments on it. And doing it sooner rather than later will help you get better mortgage rates before those missed payments ding up your credit score.

For many homeowners who find themselves having trouble paying their mortgage payment, the thought of selling their home or paying extra over the course of an extended mortgage term is the least of their worries. Their current situation is what needs to be taken care of immediately and a refinance into a longer term mortgage is the answer that can help them out. Are you in a situation where you are barely able to make your mortgage payments? Refinancing into a longer mortgage term may just be the answer for you.

View current refinance mortgage rates.

Today’s mortgage rates have been on a rollercoaster ride following several consecutive months of drops and historic lows. That rollercoaster of rates is continuing as the current rates represent the second consecutive week of decline. Here are some of today’s mortgage rates:

• The mortgage rate for a 30-year fixed rate home loan is currently at 5.09 percent this week. Last week, the rate was at 5.16 percent. That’s a 0.07 percent decrease.
• For a 15-year fixed rate mortgage, the rates are currently averaging 4.28 percent. That’s a 0.06 percent drop from the previous week’s average of 4.34. percent.
• Are you looking for an FHA mortgage? With recent guidelines put into place, you can get one of these federally insured mortgages with only a 3.5 percent down payment if you qualify. Qualified borrowers can also get a 4.625 percent interest rate on an FHA loan for a 30-year fixed mortgage.
• Does an adjustable rate mortgage appeal to you? If you qualify, you can get a 5/1 adjustable rate mortgage starting at a 3.375 interest rate if you qualify.
• Are you in the market for a jumbo loan? Jumbo loans are home loans that are too large to be eligible for protection under Freddie Mac or Fannie Mae. Depending on where you live, the qualifying range for a jumbo loan is between $417,000 and $729,750. If you are a qualified borrower, you can get a jumbo loan at a rate of 5.375 percent with 5.495 percent APR. That’s for a 30-year fixed rate jumbo loan. For a 15-year fixed rate jumbo loan, you could expect rates as low as 4.375 percent with a 4.575 percent APR.

Of course, getting the best rate on a mortgage depends on several factors, including your credit history, the individual lender and the location where you plan on buying your home. When shopping for a mortgage, remember these tips to help you get the lowest possible rates:

• Compare deals from lenders and brokers
  Buying a home is probably the largest purchase you will ever make. Before jumping into it, compare the prices of as many lenders and brokers as possible. The lenders and brokers are not going to do the work for you. It’s up to you to find the best deal possible.
• Know your financial limits
  When determining how much house you can afford, remember to take into consideration the insurance, maintenance, taxes and other fees that go along with home ownership. Just because you can afford a $2,000 mortgage payment every month doesn’t mean you can afford the home.
• Find a trusted person to help you
  The language in mortgage contracts can be confusing if you are not familiar with buying a home. If you know someone in the mortgage industry that you trust, ask them for help before agreeing to anything. You don’t want to sign up for something that you don’t understand.

There are several factors contributing to the reason why it takes so long to actually foreclose on a home and evict the residents. For one thing, banks are bombarded with foreclosures every month and the stack of papers just continues to grow. There is not enough manpower in the banks and lending institutions to carry out a foreclosure quickly and efficiently. Many people are taking advantage of this and living in their homes for free for many months.

Another reason for the delay is due to the long review process for mortgage loan modifications. Many homeowners are choosing this route in hopes of reducing the amount of their loan payments each month so they can afford their mortgage and stay in their home for the time being. But loan modifications are a lengthy process which makes the banks even more backed up than they already are.

Throw into the mix last year’s problem with bank employees improperly filing mortgage documents without reading them fully and it’s a perfect storm of problems for banks and mortgage lenders. There were literally tens of thousands of mortgages filed last year that were never given a proper evaluation. And now the banks have to be extra careful so there is not a repeat of this scandal.

According to one mortgage industry research company, there were about 2.2 million homes in the foreclosure process at the end of last month. And since there are more coming along every day, that 17-month average may get even longer before year’s end. Some analysts are predicting that the average time a person can stay in a home before actually getting evicted will be between 22 and 23 months by the end of 2011. Some banks are trying to speed along the process by hiring more workers to deal just with the foreclosures they have on their desks. But this probably won’t get the process done too much quicker, or at least not enough to make it noticeable.

Others are saying that it would be a bad idea to speed up the process because it would mean a huge number of homes on the market. That could lead to depressed prices on the homes which could be bad news for the market. Are you in the middle of a foreclosure? How long has it been since you’ve made a mortgage payment? Or are you one of the lucky ones who can still make their payment without any problem?

New data released by the S&P Case Shiller Index show that US home prices declined 3.9% in the fourth quarter of 2010. The only cities that did not experience a decline were Washington DC and San Diego. Here's what David M. Blitzer, the chair of Index Committee at S&P had to say:

“Unlike the 2006 to 2009 period when all cities saw prices move together, we see some differing stories around the country. California is doing better with gains from their low points in Los Angeles, San Diego and San Francisco. At the other end is the Sun Belt – Las Vegas, Miami, Phoenix and Tampa. All four made new lows in December. Also seeing renewed weakness are some cities that were among the last to each their peaks including Atlanta, Charlotte, Portland OR and Seattle, where news lows were also seen. Dallas, which peaked late, has so far stayed above its low marked in February 2009.”

Housing prices have taken quite a hit over the last three years and are now back to their 2003 levels. For first-time homebuyers this is good news as the price to enter the market has continued to come down. For existing homebuyers or underwater homebuyers, the news continues to be grim.