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What is FHA Mortgage Insurance? The Federal Housing Administration (FHA) insures mortgages offered by banks, savings associations, and other financial institutions. An FHA-insured mortgage is backed by the full faith and credit of the United States government. While FHA does not make loans, it benefits the homebuyer by providing mortgage insurance which encourages financial institutions to make affordable financing available. What Are the Benefits of an FHA Mortgage? FHA offers low down payment options, eligibility with less than perfect credit, a loan at a reasonable cost, and help if there is ever trouble making the mortgage payment. Because an FHA mortgage insures the lender against loss, an FHA mortgage typically has an interest rate that is competitive with the best in your market and lower than the rates charged for subprime and other non-prime mortgages. FHA is designed to help people buy a home and to help them keep it. In return for protecting lenders against loss, FHA require

1. Decide what you can afford. Generally, you can afford a home equal in value to between two and three times your gross income. 2. Develop your home wish list. Then, prioritize the features on your list. 3. Select where you want to live. Compile a list of three or four neighborhoods you’d like to live in, taking into account items such as schools, recreational facilities, area expansion plans, and safety. 4. Start saving. Do you have enough money saved to qualify for a mortgage and cover your down payment? Ideally, you should have 20 percent of the purchase price saved as a down payment. Also, don’t forget to factor in closing costs. Closing costs — including taxes, attorney’s fee, and transfer fees — average between 2 and 7 percent of the home price. 5. Get your credit in order. Obtain a copy of your credit report to make sure it is accurate and to correct any errors immediately. A credit report provides a history of your credit, bad debts, and any late payments. 6. Determine your mo

If you haven’t owned your own home in the past 3 years, you may qualify for MaineHousing’s Gift of Green . For a limited time, MaineHousing is offering eligible borrowers who use a MaineHousing mortgage: Up to $5,000 (not to exceed 4% of the mortgage amount) to help with the cash needed for closing, such as any required down payment, closing costs, and prepaids. A coupon worth up to $500 for a 2-part home energy audit. The Gift of Green is a gift, which will not be added to the loan amount, and it never has to be paid back . Because the Gift of Green promotion is part of MaineHousing’s mortgage program, you also may be able to use the Purchase Plus Improvement Option to fund home energy improvements as part of your mortgage. MaineHousing mortgages even come with payment protection for unemployment . Total Financial Incentives of Up To $15,000! Add the Gift of Green grant of up to $5,500 to the federal First-Time Homebuyer Tax Credit worth up to $8,000. This, in turn, lets you invest

A friendly reminder for you first-time home buyers out there... In order to qualify for the government’s $8,000 gift in the form of a tax credit, your deal must close by Dec. 1, 2009. It's not too late! You should have a purchase contract signed by early October, so you have 45 to 60 days to arrange financing and safely close the deal. For more information on the First-Time Home Buyer $8000 Tax Credit, click here .

Before a home owner curses the troubled housing market, he or she should take solace in the U.S. tax code, which makes buying a home a good deal for almost everyone. Here’s why: Mortgage interest deductions, including in some cases mortgage insurance premiums, reduce home owners’ tax liability by reducing income. The deduction includes interest paid on both a first and a second home. Interest on home equity loans is also deductible — whether the borrower uses the money to remodel the kitchen or to take a vacation to Disney World. Profits from selling a house are potentially a huge windfall. When a home owner sells a primary residence, any profit on the sale of the property is tax free up to $250,000 for single home owners and $500,000 for married home owners filing. Any profit above that is nearly always a long-term capital gain taxed at 15 percent — less if the seller’s tax rate is less than 20 percent. Home owners can itemize. That opens up opportunities to deduct a host of other ite