Articles Tagged With: Credit Requirements

July 12, 2011

FHA Loan Rules For Co-Signers, Co-Borrowers

When a borrower applies for an FHA insured mortgage, he or she has the option of bringing a co-signer or co-borrower to the deal. It may be easy to assume the two terms are interchangeable, but they aren’t. Co-signers and co-borrowers have different rights and responsibilities under FHA regulations and it’s important to know which is which–especially if you’re the co-signer or co-borrower. The major difference between the two is that a co-borrower “takes title to the property”, meaning that there is shared ownership between co-borrowers. Co-signers sign the legal paperwork and are obligated to pay on the mortgage. Regardless of what financial arrangements have been made privately between the co-borrowers, on paper co-borrowers share responsibility for the mortgage payment. Co-borrowers must qualify for the VA loan together. Compare those | more...

July 11, 2011

More Information on the FHA Loss Mitigation Program for Unemployed Borrowers

By Joe Wallace

The FHA offers help for those in trouble on their FHA mortgages in the form of the Loss Mitigation Program. The FHA recently sent out additional guidance aimed to specifically help homeowners who struggle to pay on their FHA loans during period of unemployment. The FHA’s “Unemployment Special Forbearance” was temporarily amended and clarified to further help prevent unemployed homeowners from going into default and foreclosure. “In Mortgagee Letter 2000-05, FHA provided mortgagees with additional guidance concerning the Loss Mitigation Program that all mortgagees must follow, when applicable, to reduce FHA insurance losses in those circumstances, as determined by the mortgagee, where delinquent mortgagors might be able to find an alternative to foreclosure.” Previous changes to the program as described in past FHA Mortgagee Letters permitted FHA lenders to “offer | more...

July 7, 2011

FHA Loans: What’s The Minimum Credit Score?

By Joe Wallace

Applying for a home loan can be daunting; some people feel intimidated by the home loan process because of past credit mistakes they’ve made and assume they aren’t eligible for a home loan because of those mistakes. But is it safe to assume that a few problems in the past will keep you from becoming a home owner? Not necessarily. According to FHA rules, what makes a borrower eligible for an FHA mortgage is a combination of credit history, steady employment and your debt-to-income ratio, and the record of reliable payments in the last 12 to 24 months. The more reliable you are as a bill payer, the better chance you have of being approved for an FHA home loan. What do the FHA loan rules say about credit scores | more...

July 7, 2011

FHA Loans: What The Lender Looks For In Your Credit Report

By Joe Wallace

When a borrower fills out an FHA loan application, there is a requirement to submit a variety of information including proof of income, residency information, and financial details including all currently open lines of credit. The lender will verify all this information, including credit history. The lender must order credit reports from the three major agencies–Equifax, TransUnion, and Experian. These reports cannot be furnished by the borrower, they must come directly from the credit reporting agencies and must contain no erasures or alterations to the physical report itself. Corrections or deletions of any erroneous information must be made by the borrower through the credit reporting company’s official channels. When the lender gets your credit reports, he or she is looking for a standard set of information as spelled out in | more...

July 6, 2011

FHA Loan Residency Requirements

By Joe Wallace

One of the unique features of FHA home loans is the occupancy or residency requirement. According to FHA rules, borrowers must certify that the home being purchased with an FHA insured mortgage must be the primary or principal residence. How does the FHA define “principal residence”? According to the FHA official site, “A principal residence is a property that will be occupied by the borrower for the majority of the calendar year.” This means that summer homes, vacation properties, time shares and similar property types are ineligible for FHA new purchase home loans. The part-time nature of these homes excludes them from the FHA mortgage loan program. This issue is easy enough to understand for a single borrower, but what do the rules say when more than one FHA loan | more...

July 5, 2011

Can I Be Turned Down For an FHA Loan Even Though I Have Good Credit?

By Joe Wallace

FHA home loans depend on several factors for loan approval. An FHA borrower must have a history of reliable payments, dependable income that is likely to continue into the future, and the right amount of income versus money paid out for monthly financial obligations. That amount, called the debt-to-income ratio, is one of the most important factors in determining whether or not to approve or deny an FHA mortgage loan application. There’s no minimum or maximum income limit for an FHA loan. The FHA looks at the debt-to-income ratio instead, using that as the yardstick which measures the applicant’s ability to pay the monthly FHA mortgage payment along with all other financial obligations. That’s why the government and your lender requires a full accounting of your current debts, including insurance | more...

July 1, 2011

HUD Announces New Disclosure Notice Requirements For Military Borrowers

By Joe Wallace

There are many situations which might make an FHA insured loan attractive to a military borrower who chooses not to use or cannot currently use their VA home loan benefit. Some military members purchased a home with an FHA loan before joining the military; others may choose FHA loan options based on personal preference or because they cannot use VA loan eligibility at the time of purchase. No matter what the reasons for choosing an FHA home loan, conventional mortgage, or VA insured loan, service members have some extra protection in many cases from foreclosure proceedings thanks to the Servicemembers Civil Relief Act (SCRA). Military members on active duty in wartime can get mortgage help, lower interest rates, and foreclosure protection as described in the act by notifying creditors in | more...

June 29, 2011

FHA Loans And Appraisal Repair Requirements

By Joe Wallace

When a home is appraised by an FHA appraiser, there may be

June 29, 2011

FHA Condo Loan Rules

By Joe Wallace

In previous blog posts, we’ve discussed the different types of FHA loans available and the various types of properties that can be purchased with an FHA insured home loan. Those properties include typical suburban houses, manufactured homes, multi-family units and condominiums. FHA condominium loans are more complex than other loans because the FHA has requirements when it comes to these loans. Borrowers can’t purchase just any condominium unit–it has to be on the FHA’s list of approved condominium projects in order to be considered for an FHA mortgage. That’s one reason why the FHA publishes a searchable list of approved condo projects on its website at https://entp.hud.gov/idapp/html/condlook.cfm. What does it take for a condominium project to be approved by the FHA so a borrower can apply for a loan to | more...

June 28, 2011

The Different Types of FHA Home Loans

By Joe Wallace

There are many different types of FHA insured home loans to choose from. Buying a home or refinancing one isn’t a one-size-fits-all process, and FHA guaranteed loans come in a variety of types to accommodate the various needs different house hunters or current home owners bring to the lender. The two most basic types of FHA home loans are new purchase loans and refinancing loans. New purchase FHA loans, by name alone, may seem to indicate that these loans are intended only for new construction houses, but new purchase simply refers to the type of transaction (a “new to you” home purchase), not the age or condition of the property itself. FHA refinancing is, as the name implies, a home loan intended to pay off an old home loan and | more...