Articles Tagged With: Credit Check

August 23, 2019

FHA Loan Down Payment Rules: When More Is Required

FHA home loan down payment rules allow for a low 3.5% down for borrowers who qualify with FICO scores in the 580-or-above category. FHA loan minimums do not address lender standards, which may be higher, but that is one reason why it’s important to shop around for the right FHA lender. The low FHA loan down payment is one reason why FHA mortgages can be so attractive, especially for first-time home buyers. But when will a borrower be required to put a higher amount down on the mortgage? There are several instances to be mindful of. FHA Loan Transactions That Require 15% Down: Identity Of Interest The FHA Single Family Loan Handbook, HUD 4000.1, says there are circumstances where 15% down is required; often when there is an identity of | more...

August 21, 2019

FHA Home Loans And The Biggest Credit Mistake You Can Make

By Joe Wallace

In this space, we discuss FHA home loans and how they get approved. And we talk a lot about the biggest credit mistake you can make leading up to your home loan application-missed payments. And we’re not just talking about missed payments on one type of credit, we discuss the effects of missing a payment no matter what it is or how important to your financial bottom line. But it is human nature to forget good advice when you only get it from one source, which is why we’re turning our attention today to the advice of one of the three biggest credit reporting agencies in existence: Experian. Experian is 125 years old and has a lot to say about how to manage credit, improve credit ratings, and how credit | more...

August 20, 2019

FHA Home Loans, Down Payments, And More: What You Need To Know Today

By Bruce Reichstein

First-time borrowers have many questions about the FHA home loan process including the subjects of down payments, seller contributions, and down payment assistance. Borrowers need to know that there are certain federal laws that require FHA home loans to limit the contribution of any third party with a financial stake in the outcome of the mortgage, and it’s good to know how these rules work. Seller Contributions Versus Seller Downpayment Assistance FHA loan rules state clearly that the seller of the home may not contribute funds toward the borrower’s down payment. This is expressly forbidden in the FHA loan rulebook, HUD 4000.1. However, sellers are permitted to contribute toward the borrower’s closing costs, capped at a maximum of six percent of the adjusted price of the property. Contributions in excess | more...

August 9, 2019

Four Things to Remember About Home Loans and Credit Scores

By Bruce Reichstein

There are four things to remember about home loans and credit scores, especially for first-time home buyers looking to buy their first piece of real estate. FHA home loan rules are more forgiving when it comes to credit scores, but there are still minimum standards and requirements to meet. Keep these four things in mind when planning your home loan application for best results. Credit Utilization And Payment History Are Both Very Important How much of your credit limit do you use? This is a question the lender needs to answer because how you use credit is just as important as all the other factors that go into home loan approval. Carrying high credit card balances can hurt your chances for home loan approval-try to keep your balances below the | more...

the importance of credit for home loan approval

August 5, 2019

FHA Home Loans And Perfect Credit: Fact Versus Fiction

By Bruce Reichstein

We get plenty of reader questions about FHA home loans. Many of those questions have to do with worries that a borrower won’t qualify for the loan. One of the biggest topics in this area? “Can I get an FHA Home loan without perfect credit?” We fielded a question like that recently-the term “perfect credit” was used. The reader seemed to assume that perfect credit is required in order to buy a home. But who do you know as a homeowner with perfect credit? The truth is, FHA home loans do NOT require perfect credit for loan approval. But many potential home owners don’t understand how the credit check process works, or the requirements for loan approval. So it’s easy to understand how people can assume wrong things about the | more...

July 25, 2019

Get Ready To Buy A Home With An FHA Mortgage

By Joe Wallace

Are you ready to buy a home? If you aren’t sure, there are some ways to know what’s left to be done before actually filling out the loan paperwork. Buying a home with an FHA loan is easier with some advance preparation and planning. Set A New Budget If you haven’t made a new budget that includes a potential mortgage payment, you should look into those numbers before you apply. You need to know how much your new house payment will affect your existing budget, and don’t forget to include extra funds for maintenance and upkeep of the home. You may need to factor in the cost of minor replacement needs, and you will also need to consider the initial outlay of cash that may be required (apart from the | more...

July 8, 2019

Myths About Home Loans and Credit

By Joe Wallace

There are lots of myths about home loans and the credit requirements you need to be approved for a mortgage. Here are some pervasive myths about credit as it relates to the home loan application you may be considering in the near future. Credit Myths: You Need Perfect Credit To Get A Mortgage FHA mortgage loan credit standards are more forgiving than some conventional options and borrowers do not need to have a perfect record to qualify. What you DO need is 12 months or more of on-time payments with no late or missed payments, a history of responsible credit use with balances that are not close to the credit limit, and a solid employment history (two years or more). Home Loan Credit Myths: The Lender Only Pulls Your Credit | more...

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

July 8, 2019

The Difference Between FHA Loan Credit Score Requirements And Your Lender’s FICO Score Rules

By Joe Wallace

We answer many reader questions about FHA home loans, including information about credit requirements, appraisal issues, and FHA loan standards. Among the most common reader questions about FHA home loans? Questions about the credit scores required to get home loan approval. This issue is confusing to some borrowers because they don’t realize that FHA loan rules say one thing and lender requirements may say another. Is this a contradiction? No. The FHA loan credit score requirements should be viewed by the borrower as the minimum standard, with the knowledge that the lender is permitted to require higher FICO scores than the FHA’s minimums but NOT permitted to require LOWER scores than the FHA minimum. In other words, consider the FHA loan FICO score numbers as the baseline lowest scores permitted. | more...

July 5, 2019

What You Need To Know When Your Home Loan Lender Pulls Your Credit Report

By Joe Wallace

Everyone who applies for a home loan should know the contents of their credit reports long before they start filling out FHA loan application paperwork. Just as important? Knowing what your loan officer is looking for out of your credit report. Did you know that FHA home loan rules published in HUD 4000.1 instruct the lender on specific areas of the report to examine? In fact, there are FHA loan standards for the credit report itself-the report must meet the following requirements in order to be used by the lender. The credit report must contain: the name of the FHA lender ordering the credit report; the name, address, and telephone number of the consumer reporting agency; the name and SSN of each Borrower; and the primary repository from which any | more...

July 3, 2019

FHA Home Loan Credit Issues: Collection Agencies

By Joe Wallace

Many borrowers want to know if they are still eligible for a home loan even if they have debts that were referred to a collection agency. Can a borrower still get an FHA mortgage if they have collection accounts listed on their credit report? The FHA rules governing this issue can be found in HUD 4000.1, which begins with the FHA definition of “Collection Accounts”: “A Collection Account is a Borrower’s loan or debt that has been submitted to a collection agency through a creditor. “ When the lender finds collection information listed on the credit report, it is not necessarily an automatic denial of the loan waiting to happen. FHA loan rules require the lender to review the information to make sure the borrower wasn’t simply disregarding the debt | more...