Articles in Category: Credit Issues

April 22, 2022

Employment And Income Verification For FHA Loans

Here is a common variation on an FHA loan question we get frequently. “I have been employed for about two years, do I qualify for an FHA mortgage?” FHA loans require a variety of financial qualifications including FICO scores, your history of payments on financial obligations, your debt-to-income ratio, and other factors. Lender standards and FHA loan rules both apply, as do some state laws and other regulations. There’s no individual factor that determines a borrower’s ability to qualify for an FHA mortgage, a number of variables come into play as mentioned above. Sometimes one or more factors can disqualify a borrower, it’s true-a low FICO score, debt ratios that are too high, missed payments in the last 12 months leading up to the loan application, or major changes in | more...

April 14, 2022

Are FHA Credit Requirements For Refinancing The Same As Buying A Home?

By Bruce Reichstein

Are FHA credit requirements the same for refinance loans as they are for buying a new home? Many borrowers want to know if their credit scores, payment history, and other factors will be scrutinized as closely when refinancing. FHA loan rules for refinances vary depending on the nature of the new loan. The rules that govern this area are found in HUD 4000.1, the FHA Single-Family Loan handbook, and lender standards may also apply. The credit requirements we’re discussing here are FHA loan minimum standards. To know what a specific financial institution may require above and beyond these standards, you will need to talk to a participating FHA lender.FHA Loan Credit Check Requirements For Cash-Out Refinance Loans FHA loan rules in HUD 4000.1 state that cash-out and the no cash-out | more...

April 11, 2022

What Hurts Your Credit Ahead Of A Home Loan

By Joe Wallace

Do you know why your credit score could drop ahead of a home loan application? If you are worried about your ability to qualify for the lowest down payment for a home loan with your FICO scores, it’s smart to know what can hurt your credit while you are in the planning stages of your FHA mortgage. There are three basic things that could affect your credit scores before you apply for a home loan. These issues are not the only ones, but they are some of the most common. You should anticipate these problems while you are planning and saving for your FHA home loan and take steps to ensure they do not become an issue. The first area to watch that potentially affects your credit scores? Your payment | more...

March 16, 2022

Building Credit Before Your FHA Home Loan

By Joe Wallace

If you want to buy a home, especially if you are shopping for a house for the very first time, you may need to build credit in the year or more leading up to your application. First-time homebuyers who do not have a long credit history do well to consider building credit, which is not quite the same thing as repairing credit. That said, the procedures for building and repairing are often similar. One important thing to remember; you don’t need a credit card to build credit. Some credit reporting agencies give you the option of having recurring payments (such as cell phones, utilities, etc.) added to your credit report. These recurring payments can help establish a pattern of reliable payments, and you will need to make arrangements with each | more...

March 15, 2022

Fixing Your Credit Before Your FHA Home Loan

By Joe Wallace

If you are considering an FHA home loan, you’ll want to begin working on your credit as soon as possible. This is true even if you feel you have good credit–there are issues a lender sees on many credit reports that may complicate the loan approval process. These issues may or may not interfere with your credit score numbers but they could be a factor in the lender’s decision to approve the loan, offer a certain interest rate, etc. If the numbers aren’t the issue, some borrowers want to know what IS the issue? In some cases, there may be errors or information that should be disputed on the report because you don’t want your loan officer making decisions about your loan based on information that isn’t accurate. The credit | more...

February 9, 2022

Do You Need To Fix Your Credit Before You Buy A Home?

By Joe Wallace

There are plenty of third parties who promise to fix your credit for you, for a price. But did you know you can do your own type of credit repair without having to pay or coordinate with anyone else? You should definitely try working on your own credit before you try to pay someone else to do it for you. But how is it done? The first thing to remember is that you need TIME. Don’t assume you can fix your credit scores and loan repayment history while you’re working with your loan officer to get your FHA mortgage application approved. You will need to start working on your credit far earlier than that, as it takes time for credit reports to notice the work you’re putting in (on-time payments, | more...

January 12, 2022

Buying A Home: Credit Questions And More

By Joe Wallace

There are plenty of questions first-time buyers ask about home loans and the credit requirements you need to get the best deal on your FHA mortgage. Here are some common questions you should know the answers to: I Have Multiple Credit Scores. Which One Gets Used? One of the more potentially confusing things to a new borrower? FICO scores. Most consumers will have three FICO scores, they may not match, and the lender may choose your middle score as “the one”. In cases where you only have two FICO scores, the lower one may be used. If you worry about FICO scores, be sure to take early steps to raise the score before applying for the loan. Start as early as possible and work on raising your scores by paying | more...

December 7, 2021

Get Ready For A Home Loan In 2022

By Joe Wallace

How do you know if you can afford a home loan? It may seem like a daunting task to estimate a monthly mortgage payment with principal, interest, taxes, and fees, but there are online mortgage calculators that can help. All you have to do is to bring a bit of information to the process to get an idea of how much that house you have your eye on might cost you. Get Started The first thing you want to do is to examine your current monthly debt and compare them to your income. What is the largest amount of a monthly mortgage payment you could afford in your current circumstances? The number you arrive at here is not necessarily the same number you’ll use for your final mortgage calculation, but | more...

November 3, 2021

FHA Loans: For Buying Your First Home

By Bruce Reichstein

Are you looking for your first home? The FHA home loan program offers mortgages with 3.5% down payments if you qualify with FICO scores, income, and responsible credit use. What do you need to know about what it takes to get approved for an FHA mortgage as a first-time buyer? A lot may depend on variables in your life such as how long you have been in the job market, what your current debt ratio looks like, and whether the employment you have now is stable and likely to continue into the first years of the new loan. Why do we say this? Because FHA mortgages require a minimum income history but not a minimum income. FHA loan approval depends on your credit history, your FICO scores, AND your employment. | more...

October 26, 2021

What You Need To Know About FHA Loans And Your FICO Score

By Joe Wallace

FHA home loan approval depends on a number of things–your payment history on your financial obligations, your employment, and your FICO scores. Credit scores are a big worry for some home loan applicants. Do you have thin credit? Have you had poor credit habits in the past that you are trying to fix? Remember, more consumers than you realize have had similar issues in the past–there is no shame in trying to correct your past mistakes and get back on track with your credit. Too many people feel a sense of shame about their past credit issues–and that shame can prevent people from taking constructive steps to help themselves. Did you know that you can begin repairing your own credit by making consistent on-time payments and lowering your balances on | more...