Articles Tagged With: Credit Requirements

October 29, 2012

Hurricane Sandy and FHA Advice on Natural Disasters and FHA Loans

Hurricane Sandy has been dominating the headlines; it’s a good time to review FHA loan policy for those who might be affected by a natural disaster such as a hurricane, flood or other weather-related issue. Much of the FHA loan policies are directed towards those who have had properties damaged by a disaster, but some borrowers have employment issues after a weather-related incident and may have difficulties making their next FHA loan payment. FHA loan rules do address that situation as well as cases where the borrower is trying to recover from storm damage or other problems. From the FHA official site: “Was your home or your ability to make your mortgage payments harmed by an event that the President declared a disaster? You may qualify for relief to help | more...

October 25, 2012

FHA Loan Reader Question: What Does “Endorsed” Mean?

By Joe Wallace

A reader asks, “Can you please explain what “endorsed” means? I started my FHA streamline refi process March 11, 2009 through Countrywide. In the meantime BoA purchased Countrywide and the refi wasn’t finalized until June 29, 2009. Its not my fault the process took so long, and I sincerely hope I am not losing out on a refi or decrease PMI because of their delays!” This reader question most likely refers to FHA mortgagee letter HUDNo.12-045, which includes the following information about FHA Streamline Refinancing: “…Acting Federal Housing (FHA) Commissioner Carol Galante announced significant price cuts to FHA

October 19, 2012

FHA Loan Income Requirements: Myths and Reality

By Joe Wallace

Income is a topic that comes up in frequently asked question about FHA loans. Some potential borrowers are misinformed about the nature of FHA mortgages; they think the program is only for the financially disadvantaged. Can a borrower earn too much to qualify for an FHA home loan? Is there a “ceiling” for the amount of income you can earn and still apply for an FHA guaranteed home loan? No. According to the FHA and HUD, “FHA’s mortgage programs do not typically have maximum income limits for qualifying, although you must have sufficient income to qualify for the mortgage payment and other debts.” That’s not to say that there are NO income limits associated with FHA loans; “Income limits may be present when qualifying for down payment assistance or other | more...

October 18, 2012

Rules For Credit Reports Associated With FHA Loan Applications

By Joe Wallace

Some FHA loan applicants may consider the credit check something of a mystery. Borrowers should know and understand how the FHA loan application process works–including the credit check–as it can help better prepare the borrower for the preparation needed to get an FHA loan approved. What does the lender need–and get–from the credit check process? Many lenders rely on something known in the industry as the “three repository merged credit report” or TRMCR to gather the borrower’s credit information. According to FHA loan rules, this report must contain information on all credit inquiries made within the last 90 days, any credit and legal data “not considered obsolete under the Fair Credit Reporting Act (FCRA)” which may include the last seven years worth of information about bankruptcy, court judgments, lawsuits, tax | more...

October 15, 2012

FHA Streamline Refinance Loans: A Reader Question

By Joe Wallace

A reader asks, “I am curious about how to get a lower interest rate on my currently FHA backed SFR home loan. I have a 30-year fixed 5% interest rate and am trying to lower my monthly payments with the current low interest rates

October 12, 2012

Can I Use A Power of Attorney To Apply For An FHA Home Loan?

By Joe Wallace

A not-so-commonly asked question, but a very important one about FHA loan rules, involves the use of a power of attorney to apply for or commit to an FHA mortgage loan. FHA loan rules state, “All borrowers applying for the mortgage and assuming responsibility for the debt must sign Fannie Mae Form 1003, Uniform Residential Loan Application (URLA), and all addenda.” “Either the initial loan application or the final, if one is used, must contain the signatures of all borrowers. The initial loan application may not be executed by power of attorney except for military personnel and incapacitated borrowers…” What does this mean? In short, there are only two types of FHA borrowers permitted to have a loan executed on their behalf by a power of attorney; the FHA official | more...

October 11, 2012

FHA Loan Reader Question: Title I Loans For Remodeling/Rehab

By Joe Wallace

A reader asks, “I am interested in borrowing a small amt. of money for remodeling my home. Is there any way I can qualify for an FHA loan for this purpose? I have never had bankruptcy, never missed a payment, never defaulted on any loan…” Something called a Title I Home Improvement loans are described on HUD.gov as a way to do just what this reader question describes. According to the official site on the page titled “About Title I Home Improvement Loans” you’ll find the following description: “HUD insures private lenders against loss on property improvement loans they make. The applicant must have a good credit history and the ability to repay the loan in regular monthly payments. Both large and small improvements can be financed. Search HUD’s list | more...

October 9, 2012

FHA Loans and Credit Score Requirements

By Joe Wallace

Recently we posted a reader question about FICO scores and FHA loan approval. The reader wanted to know why a credit score range between 540 and 618 didn’t qualify for an FHA mortgage. The reader question included the following: “My scores are 618 – 595 – 540…why couldn’t I qualify for this loan?” There are two factors at work when viewing FICO scores. The lender is required to observe FHA loan minimums–which this reader was technically able to meet. But the lender is also required to observe the FICO minimums established by the financial institution. If the FICO score doesn’t meet the bank’s minimum, it’s not eligible for FHA loan approval. How does the lender interpret the three credit scores to determine eligibility if a borrower is right on the | more...

October 9, 2012

FHA Loan Reader Question: Why Couldn’t I Qualify For an FHA Loan?

By Joe Wallace

A reader asks, “I have really been working on my credit to be able to purchase a home. My scores are 618 – 595 – 540. I paid my student loan off in full. I went and got a unsecured credit card to help boost my scores…when people check your credit the numbers roll back…I have an auto loan for just over a year that is in good standing.” “I also paid off 2 vehicles and have been at my job now for just over 16yrs….Why, Why, Why couldn’t I qualify for this loan?” There are a number of reasons why a borrower might not be approved for an FHA mortgage, but in this reader’s case the FICO score could be one of those reasons. Why? According to FHA loan | more...

October 5, 2012

FHA Loan Reader Questions: Modular Homes

By Joe Wallace

Paragraph A reader asks, “Can a modular home on a full foundation be considered for an FHA loan?” A reader asks, “Can a modular home on a full foundation be considered for an FHA loan?” In general the FHA offers two types of home loans for manufactured housing. Here’s a quote from a frequently asked questions list on the FHA official site at FHA.gov: “How about manufactured housing and mobile homes? Yes, FHA has financing for mobile homes and factory-built housing. We have two loan products – one for those who own the land that the home is on and another for mobile homes that are – or will be – located in mobile home parks.” FHA loan rules do have provisions for modular homes (which are also considered factory-built houses); | more...