Evening star. [volume] (Washington, D.C.) 1854-1972, 1938-12-03
Amortized Mortgage
Held Vital 10 Sound
Home Financing
District F. H. A. Director
Says Paying Cash Is
Best, However

The single long-term amortized
mortgage, made for a high ratio of
the appraised value of the property,
is essential to sound home financing
and secure home ownership, Henry
H. bearing, director of the Federal
Housing Administration for the Dis
trtct of Columbia, said today.
1T is true that it would be ideal
II every buyer could pay cash for
home or make a large cash down
payment" Mr.. bearing said. But
home buying today must be
budgeted according to income, and
most people want to take advantage
of home purchasing plans which
enable them to obtain good homes
without employing their life savings.
Every penny should be made to
count. Homes may be purchased
under the F. H. A. plan with an
average monthly payment of as little
as $5.98 a thousand. This includes
interest. mortgage insurance pre-
MUM and reduction of principal.
Value Seen in Comparisons.
IF the prospective home buyer
will take the trouble to compare this
plan with any other now in exist
ence, he will find that it provides
the most favorable terms available.
A loan costing $3.50 a thousand a
month to repay may be for 80 per
cent OF the property valuation and
will run for Is years, the maximum
provisions of the National Housing
Act.
"Only few lenders cling to the
old-fashioned short-term renewal
mortgage. Some others seem to be
unwilling to lend more than so or
60 per cent of the appraised value of
property and to think that II
years is about the limit of safety
for the amortization period. Such
lending practices inevitably will re-
suit in one of two things A virtual
suspension of home building, or
wholesale return to the second and
third mortgage evil.
every effort should be made to
encourage buyers to make as large
a down payment as possible, in their
own interests, but we must recognize
that we are dealing with a condi-
ton and not a theory. A single
long term mortgage for 80 per cent
of the appraised value of property
is better from the standpoint of
both the purchaser and the lender
than high-cost multiple liens for
the same amount. With small down
payments and easy monthly pay
ments, it is possible to have a sound
and sustained home building pro-
gram for families of moderate in
comes.
Other Fees Enter Picture.
"The home purchaser must pay
certain initial charges on mortgage
loans whether insured by the F. H.
A. or not. He pays a small ap-
praisal fee to the F. H. A., and the
lending institution may also charge
fees for appraisal and recording the
mortgage. just as in the case of
all other mortgage loans, it is per-
Missile for the lender to charge an
initial fee for handling F. H. A.
insured loans. Many of them, how
ever, do not maks such charges"
There are a large number of in
stitutions in the District of Columbia
area which make home mortgage
loans insured by the F. H. A., and
which have given commendable CO.
operation in making funds avail
able under the F.. H. A. nlan Tn
the case of all home mortgage loans
insured by the F. H. A. made by
any institution, the maximum an
nual interest rate is S per cent. In
q few cases it may be even lower
than that. The F. H. A. plan is
the only current plan under which
the interest rate is fixed by law for
the entire country at such a low
figure.