Articles Tagged With: Credit Requirements

June 27, 2011

FHA Loan Limits For Some Counties Could Decrease in October, 2011

The FHA has made an important announcement that could affect the loan limit on new FHA mortgages in some areas on or after October 1, 2011. According to FHA.gov, “Barring Congressional action, Federal Housing Administration (FHA) loan limits will revert back to loan limits determined under the Housing and Economic Recovery Act (HERA) for loans insured by FHA on or after October 1, 2011. As a result, FHA loan limits would likely decline in 669 of the 3,334 counties or county equivalents that are eligible for FHA insurance.” During the housing crisis of 2008, the FHA temporarily increased FHA loan limits. According to the FHA announcement, “The Economic Stimulus Act (ESA) enacted in February 2008 stipulated that FHA loan limits be set temporarily at 125 percent of the median house | more...

June 27, 2011

FHA Loans, Credit, and Bankruptcy

By Joe Wallace

We’ve had a lot of recent questions about how bankruptcy and related issues can affect a borrower’s chances to be approved for an FHA home loan. The good news is that filing for bankruptcy does not automatically disqualify a borrower from getting an FHA insured loan. Just like any other loan applicant, the FHA and lender examine several factors when deciding to approve an FHA loan. A borrower must be able to show stable income and a record of dependable payments regardless of a bankruptcy filing, so a borrower’s habits and track record in the wake of a Chapter 7 or Chapter 13 bankruptcy proceeding is just as important as a “typical” FHA loan applicant’s. How does a bankruptcy affect a borrower’s eligibility for an FHA mortgage? The short answer | more...

June 23, 2011

FHA Loan Down Payments

By Joe Wallace

The down payment issue is one that brings many would-be conventional borrowers to an FHA lender. After seeing what some conventional loans require for a down payment, the FHA minimum 3.5% is a definite advantage to a first-time home buyer. But when a borrower is doing research on FHA loans versus conventional equivalents, sometimes the details can be a bit confusing. One area some have trouble understanding (at first) is the difference between the required 3.5% FHA loan down payment for a typical home purchase and the $100 down payment required on some HUD home purchases. A HUD home purchase is not the same as taking out an FHA mortgage in the usual way. HUD homes are properties owned by the Department of Housing and Urban Development–homes that have been | more...

June 23, 2011

What is the FHA 203(b) Loan Program?

By Joe Wallace

If you’re new to FHA home loans, it’s easy to get confused by the different types of FHA insured mortgages available. There are FHA 203(b) loans, the FHA 203(k) and a host of others. Some borrowers are ready, after seeing the alphabet soup of different programs a borrower could apply for, to throw up their hands and just ask for “the FHA loan everybody applies for when they want a new home.” That loan is known as the FHA 203(b), the single-family mortgage insurance program most commonly used all over America. According to the FHA official site, the FHA 203(b) “may be used to purchase or refinance a new or existing one-to-four family home in both urban and rural areas including manufactured homes on permanent foundations. Typically, lenders offer terms | more...

June 22, 2011

Why Choose an FHA Home Loan?

By Joe Wallace

According to the official site at HUD.gov, the FHA loan program has been running since 1934. Designed to help Americans purchase affordable home loans, the FHA insured mortgage loan program features low down payment requirements, low closing costs and more forgiving credit requirements than conventional loans. Many people turn to the FHA loan program because they may not be able to qualify for loans with good interest rates or terms as favorable as those offered by the FHA. Some go directly to the FHA because they don’t feel their credit is good enough to qualify for a conventional mortgage. In many cases, an FHA loan is the best way to realize the dream of home ownership. But how does the FHA make that happen? The FHA mortgage low down payment | more...

June 21, 2011

Facts About FHA Loan Fees

By Joe Wallace

When you apply for an FHA home loan, make the commitment to buy and close the deal, there are a variety of services which must be paid for as part of the home buying process. Some fees are paid by the borrower, some by the lender, and some by the seller. Do you know what fees you’re responsible for as a borrower taking out an FHA mortgage? FHA loan fees the borrower must pay include a loan origination fee, which includes payment for the cost of doing business with your chosen lender. The buyer is also responsible for any title search and examination fees, plus legal fees where applicable. For some home sales with an FHA loan, the sellers may agree to pay the legal fees–part of an incentive to | more...

June 15, 2011

What Is the FHA Streamline 203(k) Program?

By Joe Wallace

A type of loan called the FHA Streamline 203(k) allows a borrower to finance up to an additional $35 thousand of repairs and upgrades to a FHA mortgage. This loan is designed to “to purchase and improve or upgrade the home before move-in” but can also be used to refinance an existing mortgage and add repairs or improvements up to the same $35,000 amount. According to the FHA official site, “Unlike the standard 203(k) program, any FHA approved lender may originate a Streamlined 203k mortgage.” The availability of additional funds to repair or improve a home can be a powerful incentive to close the deal on a home that still needs work to make it truly attractive to the buyer, but it’s important to know exactly what the Streamline 203(k) | more...

June 14, 2011

FHA Loans: Seller Contributions Vs. Inducements To Purchase

By Joe Wallace

In a tough housing market, house sellers often must include incentives to make their property more attractive to a borrower. In other words, the seller isn’t just putting the home up for sale, there are a few bonuses thrown into the deal such as helping with the cost of pre-paid expenses, paying discount points or other things. Some sellers will throw in some appliances as an incentive, others might offer to furnish a new large screen television, etc. When it comes to FHA loans, there are limits on how much and how far such incentives can go. The seller is not forbidden to offer any incentives, but there’s a difference between a contribution and what the FHA considers “inducements to purchase”. An inducement to purchase, while not illegal, does result | more...

June 13, 2011

FHA Loans and Your Credit Report

By Joe Wallace

Anyone applying for a new line of credit agrees to submit to a credit check, whether for a new car purchase, a credit card account or an FHA home loan. When it comes to FHA loans, the credit history is identified in FHA literature on home loans as “the most useful guide in determining a borrower’s attitude toward credit obligations and predicting a borrower’s future actions.” Simply put, an FHA loan applicant with a record of on-time payments looks like a good credit risk to the lender. But what about those who have had trouble in the past paying on time? When the lender examines your credit history, it’s not a simple case of saying no because the facts and figures show a history of late payments. According to the | more...

June 10, 2011

FHA Advice On Home Loans and Lenders

By Joe Wallace

FHA home loans are designed to be pro-consumer. While they don’t penalize a lender in any way, FHA loan rules do restrict the types and amount of fees, charges and other costs associated with borrowing. The mission of the FHA is to be fair to all parties, borrower and lender alike. The borrower doesn’t pay inflated fees, and the lender gets a loan guarantee from the government. The FHA offers referrals for housing counselors and advice to house hunters exploring their options under the FHA loan program. The FHA official site has plenty of sound advice for people trying to navigate the complexities of buying a home, getting the best price, and other aspects of becoming a home owner. A lot of it seems fairly obvious to experienced borrowers, but | more...