It's no problem these days to find bad news about the FHA, and the solvency issues brought about by the high foreclosure rates and number of homes approaching foreclosure. Some very recent news items include:
- One out of every six FHA mortgages are late by at least one payment.
- 3.32% of FHA loans are in foreclosure, the highest number since 1979.
- Since December 2007, 7 million jobs have been lost resulting in a 10.2% unemployment rate.
- Declining home prices are preventing many troubled homeowners from selling.
So, with all of this bad news, where in the world could you find a gem? Primarily, it's the historically tiny mortgage interest rates. Though many investors are already scouring the troubled loans for good deals, anyone can do the same. Though many of the problem mortgages are under water, with more owed than the home is worth, this isn't the case for all of them. There are people trying to sell who have some equity, but not enough to pay real estate commissions and fees, so they're caught in a trap. If they don't have the cash to pay at closing to make up the difference, they're unable to sell.
When you're scouring the market for good home deals, even if for your own residence and not an investment, you want to look for homes that can be purchased at, or close to, loan balance. If you find one that fits, and it also will currently appraise for more, there may be a deal for you. If your available cash and the appraisal give you a 20% equity going in, today's interest rates will make it a purchase you'll likely be happy with for years to come.