Mortgage loans come in many forms from conventional to FHA and VA loans. Each has their own set of eligibility standards and benefits, and each has their own drawbacks. When it comes to mortgage debt problems, the type of loan you carry could be the difference in finding help to avoid foreclosure.
A conventional loan is one that is not backed by the government, rather is secured solely on your personal credit and guarantee. A big benefit of a conventional loan is that they are free of some of the requirements and stipulations of a FHA or VA loan. However, with freedom comes more responsibility and defaulting on a conventional loan can be costly. Since the lender is risking much more by having only your personal guarantee, missing a payment on a conventional loan could lead you down a path to foreclosure much faster. Finding approval for a loan modification or forbearance agreement can be more challenging than in a FHA or VA loan.
A FHA loan is one that is backed by the government, which essentially makes approving the loan less risky for the lender. People often favor these loans because of their lower down payment requirement and, often, better interest rate offers. Many FHA loans also come with more flexibility in payment and fewer fees associated with changing loan conditions. The flexibility found in a FHA loan is associated with the reason that finding help for mortgage debt troubles under a FHA loan can be easier than in a conventional. Typically, more of the government programs for mortgage debt relief are more applicable to FHA loans.