Articles Tagged With: Credit Issues

August 21, 2019

FHA Home Loans And The Biggest Credit Mistake You Can Make

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 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 10, 2019

FHA Home Loan Down Payment Assistance

By Joe Wallace

The down payment is one of the daunting things for first-time home buyers-coming up with the cash to put the minimum required 3.5% (of the adjusted value of the home) may seem like an uphill task, but fortunately the FHA loan program guidelines permit the use of approved down payment assistance programs. These programs are not offered by the Department of Housing and Urban Development; potential borrowers will need to seek out these down payment assistance programs in their local area. The rules the FHA provides to organizations wishing to offer down payment assistance includes the requirement that down payment gifts or grants must not come with an expectation of repayment. They also include the requirement that such funds be properly sourced and transferred to the borrower. But FHA rules | 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...

April 17, 2019

Can I Buy A Home With An FHA Mortgage After Foreclosure?

By Joe Wallace

After a major negative credit event like a foreclosure, some home owners assume they may never be able to get a lender to take them seriously for a home loan ever again. Is this true? At first glance, FHA home loan rules in HUD 4000.1 might lead a potential borrower to think that it is. “A Borrower is generally not eligible for a new FHA-insured Mortgage if the Borrower had a foreclosure or a DIL of foreclosure in the three-year period prior to the date of case number assignment.” The abbreviation DIL stands for deed-in-lieu of foreclosure. Note that the above does NOT say the borrower can NEVER get a home loan again. There is a three-year waiting period required but it IS possible. And later in HUD 4000.1, we | more...

November 21, 2018

FHA Home Loans And Your Holiday Debt

By Joe Wallace

Are you considering an FHA home loan in 2019? Even as shoppers nationwide are preparing for Black Friday, the biggest shopping day of the year, some are being tempted by credit card offers to help pay for the gift-giving in December. But if you need a home loan in 2019, Christmas shopping season should be more carefully thought out for several reasons. It’s generally advised not to open new lines of credit in the planning stages leading up to your FHA loan application. Whether you need to refinance a home loan, get a new mortgage for your dream home, or apply for fund to repair your property using an FHA 203(k) Rehabilitation loan, you will need to maintain and pay down your existing lines of credit and avoid opening new | more...