Articles Tagged With: Credit Requirements

November 28, 2011

FHA Rules For Credit Reports and Tax Returns

Part of the FHA loan application process includes the lender running a credit check on the applicant. Depending on the type of loan and other factors, the lender may also need to contact current and/or former employers, landlords and other people who can verify income and employment data given on the FHA loan application form. Some borrowers, including those who are self-employed, freelance or small business owners may be required to furnish additional data including tax returns, business statements and other information which can help the lender establish a history of income, credit, and employment. Some of this information is provided by the FHA borrower, some is provided by third parties (such as employment and income details) and some must come from official sources. For example, tax returns must be | more...

November 25, 2011

HUD Rules Proposed To Refine Fair Housing Laws

By Joe Wallace

Those applying for FHA home loans for the first time soon learn about the wide range of federal laws enacted to insure fair treatment in the lending and housing markets. But according to Department of Housing and Urban Development Secretary Shaun Donovan, those laws need to be modified to be more inclusive. In Donovan’s official HUD blog, he writes, “…I

November 14, 2011

FHA Streamline Refinancing Loans and Credit Qualifying Requirements

By Joe Wallace

Home loan refinancing is among of the most popular types of loans in a troubled economy. When the six o’clock news has regular gloomy updates, it’s not surprising that people turn to refinancing loans to lower their payments and improve the bottom line. FHA Streamline Refinancing Loans can help do just that–this type of refinancing is appealing because in many cases no additional credit check is required by the FHA (though the lender may require one anyway). In some cases, the lender does not have the option to process the FHA refinancing loan with no credit check–certain situations can “trigger” the credit check requirement. Those include any change in the mortgage term that results “in an increase in the mortgage payment of more than 20%” according to the FHA rules, | more...

November 11, 2011

FHA Loans and Fair Housing Rules: Settlement Reached in Maternity Discrimination Case

By Joe Wallace

FHA loans, like VA and conventional home loan programs, are subject to the Fair Housing Act, RESPA and other federal laws which work together to prevent discrimination in the housing market. One of the rules established by these laws concerns discrimination against home loan applicants based on their family status. That includes discrimination against FHA loan applicants based on pregnancy, single parenthood, the number of children in a given family, and other factors. Such discrimination is prohibited by federal law. The Department of Housing and Urban Development issued a press release on November 3, 2011, stating that it “has reached an agreement with Luxury Mortgage Corporation (LMC), a mortgage lender based in Stamford, Connecticut, settling accusations that the lender discriminated against a woman by denying her mortgage loan because she | more...

November 3, 2011

FHA Loans and the Foreclosure Process

By Joe Wallace

Foreclosure is the worst-case scenario for home owners, but many don’t understand how the process works or at what point the FHA borrower may be in danger of losing his or her home. If you don’t understand how the foreclosure process works, but fear you may be nearing default or worse on your FHA mortgage, it’s definitely time to get educated about foreclosure and get in touch with your lender. FHA guidelines encourage borrowers to work closely with both the lender and the FHA to avoid loan default. What is the FHA timeline when it comes to missed payments and foreclosure proceedings? Many don’t understand how this works. Borrowers who miss a single payment face a serious issue, but there is still time to work out the problem and avoid | more...

October 27, 2011

FHA Loans and Rental Income

By Joe Wallace

There are many frequently asked questions about FHA loans in connection with rental properties. Some borrowers purchase a home with an FHA insured mortgage and live there for a while, then decide to explore their options for renting the existing home out and purchasing a new one to live in. One of the most common questions in this case has to do with qualifying income for a new FHA loan. “Can I rent my current home and use the income to qualify for a new FHA mortgage?” According to the FHA official site, there was concern that borrowers might exaggerate the amount of rental income received on the first property. To address those concerns, the FHA instituted a new policy which took effect in late 2008. “Beginning with case number | more...

October 26, 2011

When an FHA Loan Application is Denied

By Joe Wallace

Transparency in the lending process and informed borrowing are two of the most important issues related to the “front end” of FHA loans. Before you commit to buy, even before you turn in an FHA home loan application, it’s crucial to know what your rights as a borrower are and how those rights affect every step of the FHA loan process. Did you know you’re entitled to an explanation as to why an FHA loan application was denied? According to the FHA official site, the Equal Credit Opportunity Act (ECOA) governs lender responsibilities in this area. “If your application is denied, ECOA requires your lender or mortgage broker to give you a statement of the specific reasons why it denied your application or tell you how you can obtain such | more...

October 26, 2011

How Long Does It Take To Process an FHA Loan Application?

By Joe Wallace

A frequently asked question about FHA home loans concerns the length of time it takes to learn whether the loan application has been approved or not. This is a part of the FHA loan process that can be stressful for some borrowers, especially those who have never applied before and don’t know what to expect. The simple answer is that FHA requirements include a rule that the lender must take action on your application and let you know about that action no later than 30 days after the application has been completed and turned in. FHA rules emphasize the application must be complete for this rule to take effect. But what does that mean? Some borrowers mistakenly think submitting partial information on credit data, employment history or other information might | more...

October 25, 2011

FHA Loans and Non-Purchasing Spouses

By Joe Wallace

One FHA loan frequently asked question relates to married FHA borrowers with non-purchasing or non-occupying spouses. When an FHA borrower applies for a loan and the spouse does not co-sign or co-borrower, are there situations where the spouse could be required to sign the loan? According to FHA loan rules, this issue depends greatly on state law. The FHA itself has no requirement for a non-borrowing spouse to sign, but states which require certain types of documentation for “valid and enforceable” loans could need a signature from the non-borrowing spouse. But what kind of signature? In these cases, the state law usually requires a signature to indicate the non-borrowing spouse’s status in connection with the loan. The non-borrower isn’t obligated by law to become financially responsible–just to state they are | more...

October 21, 2011

Getting Ready For An FHA Home Loan

By Joe Wallace

Buying a home is a big decision. There are many factors to consider when trying to prepare for the commitment of home ownership, and an FHA loan applicant can learn a great deal by examining an FHA loan application and using an FHA mortgage calculator to learn what kind of financial details come into play. FHA loan pre-qualifying questions at sites like FHA.com (a private company, not a government website) ask some very important starter questions you can use to begin your research. For example, do you know how much you’re willing to spend on the home? Many borrowers at the beginning of the research process have a hard time judging what prices are fair for homes in their area and which ones might need some negotiation. Anyone who feels | more...