Articles Published in: July 2011

July 8, 2011

FHA Loans: Extended Mortgage Relief For Unemployed Homeowners

An FHA press release, HUDNo. 11-139, has announced changes to FHA loan rules which require lenders to extend the loan forbearance period for unemployed FHA borrowers under the Special Forbearance Program. The new forbearance period for that program is now 12 months, a significant change from the previous requirement. The FHA press release says the Obama administration “also intends to require servicers participating in the Making Home Affordable Program (MHA) to extend the minimum forbearance period to 12 months wherever possible under regulator and investor guidelines.” According to the FHA, “The changes to FHA

July 7, 2011

FHA Loans: What’s The Minimum Credit Score?

By Joe Wallace

Applying for a home loan can be daunting; some people feel intimidated by the home loan process because of past credit mistakes they’ve made and assume they aren’t eligible for a home loan because of those mistakes. But is it safe to assume that a few problems in the past will keep you from becoming a home owner? Not necessarily. According to FHA rules, what makes a borrower eligible for an FHA mortgage is a combination of credit history, steady employment and your debt-to-income ratio, and the record of reliable payments in the last 12 to 24 months. The more reliable you are as a bill payer, the better chance you have of being approved for an FHA home loan. What do the FHA loan rules say about credit scores | more...

July 7, 2011

FHA Loans: What The Lender Looks For In Your Credit Report

By Joe Wallace

When a borrower fills out an FHA loan application, there is a requirement to submit a variety of information including proof of income, residency information, and financial details including all currently open lines of credit. The lender will verify all this information, including credit history. The lender must order credit reports from the three major agencies–Equifax, TransUnion, and Experian. These reports cannot be furnished by the borrower, they must come directly from the credit reporting agencies and must contain no erasures or alterations to the physical report itself. Corrections or deletions of any erroneous information must be made by the borrower through the credit reporting company’s official channels. When the lender gets your credit reports, he or she is looking for a standard set of information as spelled out in | more...

July 6, 2011

FHA Loan Residency Requirements

By Joe Wallace

One of the unique features of FHA home loans is the occupancy or residency requirement. According to FHA rules, borrowers must certify that the home being purchased with an FHA insured mortgage must be the primary or principal residence. How does the FHA define “principal residence”? According to the FHA official site, “A principal residence is a property that will be occupied by the borrower for the majority of the calendar year.” This means that summer homes, vacation properties, time shares and similar property types are ineligible for FHA new purchase home loans. The part-time nature of these homes excludes them from the FHA mortgage loan program. This issue is easy enough to understand for a single borrower, but what do the rules say when more than one FHA loan | more...

July 5, 2011

Can I Be Turned Down For an FHA Loan Even Though I Have Good Credit?

By Joe Wallace

FHA home loans depend on several factors for loan approval. An FHA borrower must have a history of reliable payments, dependable income that is likely to continue into the future, and the right amount of income versus money paid out for monthly financial obligations. That amount, called the debt-to-income ratio, is one of the most important factors in determining whether or not to approve or deny an FHA mortgage loan application. There’s no minimum or maximum income limit for an FHA loan. The FHA looks at the debt-to-income ratio instead, using that as the yardstick which measures the applicant’s ability to pay the monthly FHA mortgage payment along with all other financial obligations. That’s why the government and your lender requires a full accounting of your current debts, including insurance | more...

July 5, 2011

FHA Streamline Loan Changes

By Joe Wallace

The FHA Streamline loan program is a refinancing option for FHA borrowers which in most cases allows a no-credit-check refinancing loan. Changes to the program has modified the terms and conditions of FHA streamline loans, and FHA borrowers who looked into the program in the past should know about the updates in order to make a properly informed decision on when to apply for streamline refinancing. The FHA breaks down the modified streamline refinancing loan rules into two different categories. The first is for cases assigned on or after 4/18/2011. the second is for cases between 11/17/2009 and 04/17/2011. The most important details for the new streamline FHA refinancing loan rules affects both categories in the same way. For example, the FHA requires streamline loans the result in a “net | more...

July 4, 2011

FHA Refinancing Loans for Condominium Units

By Joe Wallace

When an FHA loan applicant wants to get a condo loan, they are only permitted to get loans for FHA approved condominium projects. Condos must meet certain FHA requirements in order to be approved. Those requirements aren’t limited to the usual minimum property requirements, they also include how many units can or must be sold with FHA insured loans and other rules unique to condominium loans. One aspect of condo loans borrowers might not be aware of is that the FHA may withdraw its approval of a particular condo project. The property that fails to meet FHA requirements for approved condos may lose its approval, directly affecting those interested in purchasing units in that building and those who want FHA refinancing for units already purchased. According to the FHA, “Generally, | more...

July 1, 2011

HUD Announces New Disclosure Notice Requirements For Military Borrowers

By Joe Wallace

There are many situations which might make an FHA insured loan attractive to a military borrower who chooses not to use or cannot currently use their VA home loan benefit. Some military members purchased a home with an FHA loan before joining the military; others may choose FHA loan options based on personal preference or because they cannot use VA loan eligibility at the time of purchase. No matter what the reasons for choosing an FHA home loan, conventional mortgage, or VA insured loan, service members have some extra protection in many cases from foreclosure proceedings thanks to the Servicemembers Civil Relief Act (SCRA). Military members on active duty in wartime can get mortgage help, lower interest rates, and foreclosure protection as described in the act by notifying creditors in | more...