Smart Money: FHA loan is just one mortgage option


DEAR BRUCE >> What are some of the benefits of an FHA loan?

— Reader

DEAR READER >> There are many benefits that you might be looking at, but the most obvious one is that you're likely to get a lower interest rate because the loan is guaranteed by the Federal Housing Administration. You are also subject to some restrictions that are placed on FHA lenders, which could work to your disadvantage. On balance, I would be looking for the lowest interest rate first and then measure it up against an FHA loan.

DEAR BRUCE >> I had a fairly significant number of HH bonds come due Jan. 1 of this year. I sent them in for redemption and my certified mail receipt is stamped that they were received on Jan. 4. I thought I would see the deposit show up in my bank account in 10 days or so.

I called the Retail Treasury Securities number and actually spoke to a live representative, who verified receipt of my bonds. To my mild horror, I was informed that due to a backlog, I would not receive the redemption for two to three months. Out of curiosity and my inborn impatience, I called again on Feb. 10 and just about passed out when I was informed that the "backlog" was now four to five months!

I am being robbed every day of interest I could be getting just by having this deposited in a 2 percent CD! We are accustomed to inefficiency and waste by our government, but this to me is a form of theft. How is this possible?

— Reader

DEAR READER >> I can see why you're upset. But unfortunately, at the same time the government has more and more work to do, its budget has been cut by an enormous amount of money. As a consequence, it can't get this work done in a reasonable time.

You're correct, as well, that you're being "robbed" every day because you're not getting your money to reinvest. I don't know any other answer for you except to complain to the government. As you point out, you're being penalized for its inefficiency, and the government is gaining by this inefficiency since it still has your money.

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