Articles Tagged With: Credit Check

October 11, 2017

How Can I Get Ready For An FHA Loan Application?

How can I get ready for an FHA loan application? The process includes some advice you’ve likely heard before (check your credit, make sure you have on-time payments, and avoid new credit applications before you apply for a home loan) but there are other steps to take in the earliest stages of your house hunting journey that can be very helpful. Home Economics Do you know how much it will cost to live in and maintain your home? Utility bills for a house are likely to be higher than for a small apartment. It’s important to start learning what typical utility rates, commuting costs, and other expenses related to owning your home instead of renting. You’ll also want to investigate how much it may cost down the road to repair | more...

October 2, 2017

What Are The FHA Loan Credit Score Rules?

By Joe Wallace

What are the FHA loan credit score rules? Do you know the difference between FHA loan standards and lender standards? First time home buyers should know what the rules are long before starting the search for a new home. FHA Loan Credit Score Standards FHA home loans require a FICO score minimum of 580 or better to qualify for the lowest down payment of 3.5%. FICO scores are not the only criteria for approving or denying the home loan, so if you know your FICO score but aren’t sure about the rest of the financial qualifications for FHA loan approval, you’ll definitely want to keep reading. Lender Credit Score Standards Lender FICO score standards can be (and often are) higher than FHA loan minimum requirements. That means that even though | more...

Conventional Loan Interest Rates Make History, FHA Loan Rates Still Incredibly Low

October 2, 2017

Credit Score Issues and FHA Loans

By Bruce Reichstein

Do you know how credit score issues affect your FHA home loan application? For most borrowers, there’s no such thing as a new purchase loan with no credit check; The FHA loan handbook (HUD 4000.1) instructs the lender that credit score checks for FHA mortgage loan applications are mandatory except in certain instances such as for FHA Streamline Refinance loans, and other transactions as described on page 158: “The Mortgagee must review the credit report to determine the Borrower’s Minimum Decision Credit Score (MDCS), except for Mortgages to be insured under Section 247, Section 248, Streamline Refinances, and Assumptions. The MDCS will be used to determine the maximum insured financing available to a Borrower with traditional credit.” HUD 4000.1 adds that FHA loan applicants who have non-traditional or insufficient credit | more...

September 26, 2017

How Does My Credit Score Affect My FHA Mortgage Loan?

By Joe Wallace

How does my credit score affect my FHA mortgage loan? There are several areas where FICO scores may affect how much a borrower pays including interest rates, down payment issues, and more. FHA Loan Credit Score Rules: Two Standards There are two basic sets of rules and requirements governing borrower credit scores. One set of rules is found in HUD 4000.1, and gives the FHA Single Family Home Loan program minimum requirements for credit scores and how they affect a borrower’s down payment requirements. The other set of rules and regulations are those of the individual participating lender. Your chosen lender may have higher standards than FHA minimums, and this is permitted by law as long as those higher standards conform to Fair Housing Act policies and other federal regulations. | more...

September 12, 2017

FHA Loan General Credit Requirements

By Bruce Reichstein

Do you know what the general credit requirements are for FHA mortgage loans? Outside of FHA loan FICO minimums (580 or above for maximum financing according to HUD 4000.1, though lender standards may apply beyond this) and employment history, there are a set of standards listed in the FHA loan handbook. Those standards include instructions to the lender on how credit is to be analyzed and how credit data may be collected. Those standards include the requirement that a participating FHA lender must “analyze the Borrower’s credit history, liabilities, and debts to determine creditworthiness.” In the pursuit of this, the lender must get credit reports from “an independent consumer reporting agency”. The lender “must obtain a credit report for each Borrower who will be obligated on the mortgage Note. The | more...

Getting An FHA Mortgage After Bankruptcy

August 16, 2017

Is My Credit Good Enough For An FHA Home Loan?

By Bruce Reichstein

Is my credit good enough for an FHA home loan? Borrowers need to know what FHA loan minimum credit standards are, but they will also need to find out what their participating lender’s credit requirements are above and beyond FHA loan minimums. FHA Minimum Standards For FICO Scores The FHA loan handbook, HUD 4000.1, lists the criteria the FHA requires to qualify for a home loan. For most FHA mortgage loans, borrowers who have FICO scores of 580 or higher qualify for maximum financing with the lowest down payment possible (3.5% of the adjusted value of the home or the purchase price, whichever is lower). Borrowers with FICO scores between 500 and 579 may technically qualify for an FHA mortgage, but with a minimum 10% down. Borrowers with FICO scores | more...

August 7, 2017

Which Credit Score Will My Lender Use For My Home Loan?

By Bruce Reichstein

Which credit score will my lender use for my home loan? There is understandably some confusion over this issue; there are three major credit reporting agencies, and multiple credit scores possible. How does your lender know which score(s) to use? When it comes to FHA mortgage loans, the FHA loan handbook has instructions for the lender on how to proceed when evaluating a borrower’s credit scores. One page 132 we learn: “The Minimum Decision Credit Score (MDCS) refers to the credit score reported on the Borrower’s credit report when all reported scores are the same. Where three differing scores are reported, the middle score is the MDCS. Where two differing scores are reported, the MDCS is the lowest score. Where only one score is reported, that score is the MDCS.” | more...

July 20, 2017

What Is An FHA Streamline Refinance Loan?

By Bruce Reichstein

What is an FHA streamline refinance loan? This type of refinance loan option is intended for borrowers who have existing FHA mortgages and want to refinance into a lower interest rate or monthly payment. Streamline refinance loans allow the borrower to apply with no FHA-required appraisal or credit check. Your lender may require one or both, but the FHA allows the option to apply without such requirements. That’s a unique feature-FHA streamline refi loans allow the lender to use the borrower’s existing credit and appraisal data to approve the loan. This type of borrowing can be a major advantage for the home owner who has financial goals that include lower monthly payments. How Streamline Refinance Loans Work The FHA loan handbook, HUD 4000.1, describes streamline refinancing as follows: “Streamline Refinance | more...

July 19, 2017

Who Can Refinance An FHA Loan? Requirements You Should Know

By Joe Wallace

Who Can Refinance An FHA Loan? We’ve been examining that question recently and according to HUD 4000.1, the FHA loan handbook, at least one borrower on the FHA refinance loan transaction must have legal title to the property. Under a section titled, “Borrower Eligibility”, we learn: “At least one Borrower on the refinancing Mortgage must hold title to the Property being refinanced prior to case number assignment.” But there is also, depending on the nature of the home to be refinanced, a requirement on the property type itself. HUD 4000.1 states: “For a transaction involving a Manufactured Home to be considered a refinance, the Manufactured Home must have been permanently erected on a site for more than twelve months prior to case number assignment.” What are some other FHA refinance | more...

July 18, 2017

How Do You Refinance An FHA Loan? FHA Refi Options

By Joe Wallace

How do you refinance an FHA loan? In our last blog post on this subject, we discussed the need to determine your financial needs and goals before examining the different types of FHA refinance loan options. Are you planning to stay in your home for the duration of the loan? Do you need to sell long before then? The answers to those questions will help determine which refi loan is right for you. But what ARE those options? FHA Cash-Out and No Cash Out Refinance Loans Borrowers who have existing FHA mortgages or even non-FHA home loans can refinance with either FHA Cash-Out refinancing or a no-cash version of the same. Cash out refinance loans permit the borrower to get money back on the transaction. Basically once your original mortgage | more...