August 6, 2015
Many borrowers want to know what might be considered a problem when it comes to the lender’s review of credit histories and FICO scores.
Lender standards apply in all such situations, so FHA minimums aren’t the only requirements to be concerned with, but in general there are some credit issues that could require the lender to process your loan paperwork “by hand” or take a closer look at your financial qualification data.
What are these issues? According to the FHA/HUD official site, delinquency is an important factor:
–Bankruptcy, foreclosure, collection account, charge-off, tax lien, or judgment;
–Any mortgage trade line including mortgage line-of-credit payments, during the most recent 12 months, consisting of:
–3 or more late payments of greater than 30 days, or
–1 or more late payments of 60 days plus 1 or more 30-day late payments,
–1 payment greater than 90 days late.
Late Mortgage Payments for Cash-out Refinance Transactions
FHA also requires the lender to take a closer look if any mortgage trade line including mortgage line-of-credit payments reflects the following:
–a current delinquency; or
–any delinquency during the most recent 12 months; or
–on the mortgage being refinanced, less than six months payment history.
FHA loan rules state that mortgage payments are considered “delinquent” if not paid, “within the month due”.
That’s why it is very important to carefully review your payment history and monitor your payment activities closely in the year leading up to your mortgage loan application. These issues may not always result in a loan being denied, but more often than not they can make getting approval more difficult.
Do you have questions about FHA home loans? Ask us in the comments section.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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