Chances are you might be familiar with what the acronym FHA stands for, but does your knowledge of Federal Housing Administration loans end there?

If so, you are not alone.

By Jay Hummer

So are these loans for everyone?

An FHA loan is appealing to prospective buyers because it enables them to buy a home with a smaller down payment and also enables them to use gifts toward that down payment and closing costs. To fund the FHA’s obligations, they collect an upfront premium from the buyer and apply a small ongoing monthly fee.

While FHA loans may not be the right fit for everyone, there is a lot of helpful information on HUD’s website describing good candidates for FHA loans as well as guidelines and practices.

Some industry experts have called FHA loans the second coming of subprime loans. In today’s market lending practices have tightened up, putting more measures in place to prevent this from becoming the case. The majority of FHA loans being sold are fixed rate mortgages where a buyer has to fully disclose documentation validating income and assets, a stricter screening practice than the one implemented with subprime loans.

Another differentiating factor is that there is never prepayment penalties associated with an FHA insured loan. In other words, you can refinance at any time and not worry about paying a penalty—unlike most subprime loans that carry large fees to do so.

You have heard the horror stories of how people have extended well beyond their means and purchased homes that put them into debt well over their heads, ultimalty leading to a spike in foreclosures nationwide. Housing throughout New England has become more affordable recently, enabling more and more families to live out the dream of home ownership. The Federal Housing Administration is here to help provide homebuyers opportunities to achieve this dream, and I’d encourage you to contact a RE/MAX agent to see if an FHA backed loan is the right fit for you.

Jay Hummer, the Executive Vice President and Regional Director of RE/MAX of New England, has 25 years experience in the real estate franchise industry, beginning his career in New York City in 1984. As the Executive Vice President and Regional Director, Hummer oversees 250 offices and 3,000 sales associates in Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont. The RE/MAX website is www.remax.com.

The prospect of a 4.5 percent, 30-year mortgage was a welcome silver lining to the current downturn for many beleaguered homeowners.

But visions of hundreds in monthly savings that many homeowners and would-be buyers were salivating over appear to be vanishing almost as quickly as they appeared earlier this spring.

After hitting rock bottom in April mortgage rates are now surging back past the 5 percent mark and beyond and beyond.

Stocks and commodities are proving popular investments again as signs that the recession is finally easing mount.

And that has meant the flood of investment in government treasuries, considered a safe bet in tough times and which helped drive down mortgage rates, is now receding.

After dipping as low as 4.8 percent earlier this year, the average 30-year mortgage rate is already back to 5.25 percent and headed higher.

The question now is whether the current surge in rates is a temporary, or whether another round of aggressive action by the Fed could push rates back below five percent.

Personally, I’d like nothing better than just that – I am wrapping up a new, 30-year-mortgage on my Natick fixer upper after a major addition.

But frankly, the signs do not look good.

Still, there’s a need for something called context here. While rising rates could put a dent into the refinance business, prospective homebuyers in the Boston area are still likely to benefit from weak or falling prices for some time to come.

And let’s face it, rates in the 5 percent range and even 6 percent are pretty good by historic standards. Just ask anybody who lived through the dismal real estate markets of the late 1970s and early 1980s, when double digit interest rates were the norm.

But that still hard news for those who had their heart set on a 4.75 percent mortgage.

“People are looking for that magical four percent,” Norman Calvo, chief executive officer of Universal Mortgage Inc. in Brooklyn, New York, told Bloomberg News. “When you get there you have that feeling of ‘Oh my God it’s the best thing, I’ve got to buy.’”

Not to say there’s no chance we will get back to those magical rates, because of course there is.

After all, this spring’s rock bottom rates were no act of nature, but in a good measure as a result of a concerted campaign by Ben S. Bernanke, the Federal Reserve chief, to bring down interest rates.

The Fed spent nearly $500 billion buying up mortgage backed securities and another $130 billion on treasuries in a bid to push mortgage rates down, the Wall Street Journal reports.

The Fed still has more than $700 billion alone to spend on mortgage-backed securities, and there are indications that officials may be considering just such an option, Bloomberg reports.

The concern is that rising interest rates could stall the housing recovery, and with it, the economy.

Yet so far, Bernanke’s campaign to bring down rates has been both costly and elusive.

In its drive to lower mortgage rates, the Fed has spent more than $2,500 per borrower, according to a J.P. Morgan study cited by the Wall Street Journal.

While rates did drop below five percent, it was just for a few weeks between March and the end of May.

And a look at past history is not encouraging as well for those lusting for a return of 4.75 percent mortgage rates.

Mortgage rates last dipped below 5 percent back in 2003 during the recovery from the last recession, but quickly snapped back, not to return again to such lows until this past spring, according to Karl Case, the Wellesley College housing guru.

All this is likely bad news for those looking to refinance.

Industry analysts are already predicting as precipitous drop-off in the rush to refinance, with volume potentially dropping by half.

But for home buyers, the news is a bit more of a mixed bag.

While landing a mortgage below 5 percent could certainly reduce those monthly payments, prospective buyers can also take advantage of a weak market where prices will likely continue to slide for some time.

Home prices in the Boston area will continue to fall through this year and into 2010, according to a recent report by the New England Economic Partnership.

And lower prices are certainly another way for buyers to lock in lower monthly payments.

Scott Van Voorhis is a freelance journalist.  He covered real estate, from home sales to plans for new office towers, for nearly a decade at the Boston Herald. Scott left the newspaper business last fall to launch his own freelance writing business, specializing in real estate and business issues.

There’s a saying originally attributed to British Prime Minister Benjamin Disraeli, and a favorite line of none other than Mark Twain that goes, "There are three kinds of lies: lies, damned lies, and statistics."

The idea is that isolated numbers in a vacuum can’t tell the whole story. This phrase sprung to mind while reading some of the coverage about the recent MAR statistics.

One headline blared “Home prices, sales plunge in Bay State.”

Accurate? Well, yes, depending on one measure. A traditional standard for reporting monthly statistics is on a year-over-year basis, and from that standpoint, the market remains down. But another measure that should be equally considered is how do numbers compare month-to-month? These numbers tell another story entirely.

Some key bullet points from the April MAR report. To read the full report, click here.

- While median prices were down 12.5 percent for single-family homes and 14.2 percent for condos, it is the smallest annual price decrease since October 2008 and November 2008 respectively. 

- On a month-to-month basis single-family median prices were up 7.8 percent from March, the largest month-to-month increase since MAR has been tracking monthly median prices.

- Single-family home sales were down 13 percent in April compared to the same time last year, while condominium sales were down 28.8 percent.

I am not suggesting here that year-to-year numbers should be ignored completely. But I’d go as far as to suggest that in these unique times, focusing on month-to-month will give you a more accurate picture of how the market is moving.

The reality is, given the timing of when the economy took its biggest, sustained hits from October 2008 through February 2009, it is unlikely that we’ll see improvement in year-to-year numbers until the beginning of 2010 at the earliest. The economies of early 2008 and early 2009 are substantially different, across all sectors. That’s yet another reason to avoid making year-to-year stats your primary measure of the market.  But that does not, and will not, mean that the market isn’t picking up.  But it will not rebound with the historic speed that it disintegrated.

For you sports fans out there, you know that isolating one statistic fails to give you the complete picture of a player. You need to evaluate whatever can be measured across the board and then draw your conclusions. The same holds true for real estate.

Are relevant statistics, like beauty, in the eye of the beholder? Maybe. But if you are following what is going on in the housing market, I urge you under all circumstances – read beyond just the headlines, look at all of the numbers, and then place those number into context of the times. If you don’t, you just may miss the real story.

Jay Hummer, the Executive Vice President and Regional Director of RE/MAX of New England, has 25 years experience in the real estate franchise industry, beginning his career in New York City in 1984. As the Executive Vice President and Regional Director, Hummer oversees 250 offices and 3,000 sales associates in Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont. The RE/MAX website is www.remax.com.