Articles Tagged With: Credit Requirements

May 13, 2011

FHA Loans For Manufactured Homes: Which Manufactured Homes Are Eligible?

The rules for FHA insured loans have long included manufactured homes; the FHA recognizes that not all borrowers need or want a tradition suburban home, condo, or multi-family unit. Manufactured homes have their own unique requirements in order to be approved for FHA mortgages, and in order to be eligible for FHA financing, the home must meet these requirements to the letter unless otherwise specified in FHA loan requirements. For starters, a manufactured home is not eligible for an FHA insured loan unless it has at least 400 square feet of floor space. It must be built upon and remain on a permanent chassis and foundation. That foundation must be considered permanent and meet FHA specifications. The home must be classified as real estate, which goes back to the permanent | more...

May 12, 2011

FHA Rules on Non-Occupying Co-Borrowers

By Joe Wallace

In our last blog post we discussed FHA options that apply to military members who might explore FHA insured loan options when a VA loan isn’t available. Military families often face unique circumstances which affect the ability to meet some obligations as an FHA home loan applicant. For example, a military member could be sent to a war zone for an extended period of time–which could lead to worries about fulfilling FHA occupancy requirements. Such situations are usually covered under FHA rules and don’t necessarily mean problems with an FHA mortgage. FHA rules also address circumstances a borrower might find themselves in when applying for an FHA insured loan with a non-occupying co-borrower. Did you know FHA requirements state that all non-occupying co-borrowers and/or co-signers must have a principal residence | more...

May 12, 2011

FHA Loans For Military Veterans

By Joe Wallace

The Department of Veterans Affairs offers VA home loans to qualified service members as part of their VA benefits package. Why would a veteran want to explore options for an FHA home loan? It’s a very good question, and depending on the status of a military veteran, he or she may find an FHA mortgage to be a good alternative when the full benefits of a VA loan are unavailable. VA loan applicants must first apply for eligibility through the VA–the VA loan benefit is not automatic. In some cases the borrower may not have served long enough to qualify for benefits. This is true in the case of Guard and Reserve members who haven’t served for six years (unless “otherwise eligible” according to the VA). That’s just one example, | more...

May 11, 2011

Is There A Penalty For Pre-Paying On An FHA Home Loan?

By Joe Wallace

It’s common knowledge that you should read a loan contract carefully, but when applying for a mortgage loan, many first time home buyers struggle to understand some of the fine print. It’s important to ask questions about any portion of an FHA or conventional loan agreement you don’t understand. For example, some buyers don’t fully grasp the implications of the penalties for “early payment” in a mortgage loan contract. Did you know some conventional loans can charge fees for early payoff of a home loan? FHA loan regulations don

May 10, 2011

How Does Chapter 13 Bankruptcy Affect My FHA Loan Application?

By Joe Wallace

In our last blog post we explored the FHA rules governing Chapter 7 bankruptcy and FHA mortgage loan applications. Having a Chapter 7 bankruptcy on your credit record does not automatically disqualify you from an FHA mortgage, but what about those who have Chapter 13 bankruptcy proceedings on their credit history? There are many similarities in the FHA rules for Chapter 13 bankruptcy and Chapter 7. The first is that having a Chapter 13 does not automatically mean a borrower will be rejected for the new FHA mortgage loan. Like Chapter 7 rules, the FHA requirements for Chapter 13, a record of on-time payments and improved credit habits is required. But unlike the FHA rules for Chapter 7, borrowers who filed Chapter 13 bankruptcy in the past have additional rules | more...

May 10, 2011

How Does Chapter 7 Bankruptcy Affect My FHA Loan Application?

By Joe Wallace

A common question for some FHA loan applicants has to do with previous bankruptcy filings and how having a bankruptcy on a credit record can affect a new application for an FHA home loan. There are two types of bankruptcy-Chapter 7 is a liquidation type bankruptcy, Chapter 13 is a reorganization process where outstanding debts are paid off over a period of up to five years. Chapter 7, where the borrower’s assets are liquidated in order to help pay off the debts owed, does not automatically mean an FHA loan applicant will be denied a mortgage loan. According to the FHA official site, “A Chapter 7 bankruptcy (liquidation) does not disqualify a borrower from obtaining an FHA mortgage if at least two years have elapsed since the date of the | more...

May 9, 2011

Can I Get an FHA Home Loan for a Second Home?

By Joe Wallace

In other blog posts we’ve written about the rules for FHA home loans, which include requirements that the property be used as a primary residence. That means an FHA borrower cannot take out a mortgage to purchase a summer home or vacation property–the rules forbid FHA loans for such “recreational use” purchases. Those rules aside, there are some instances where and FHA borrower could qualify to purchase a second home if certain conditions are met. The FHA describes such homes as “secondary residences”, stating “A secondary residence is a property the borrower occupies in addition to his or her principal residence.” These home loans are approved only when the FHA has evidence that “an undue hardship exists, meaning that affordable rental housing that meets the needs of the family is | more...

May 6, 2011

Refinancing to an FHA Mortgage From a Conventional Loan for Underwater Borrowers

By Joe Wallace

In a troubled housing market, many borrowers discover the property they’ve invested in has lost value, and the borrower may owe more on the home than they can reasonably expect to sell the property for. What does a borrower do in a situation where a potential loss on the home could occur through no fault of their own? For a limited time the FHA offers help to those in “negative equity positions” with an FHA refinancing loan option that moves the borrower from a conventional mortgage to an FHA-insured loan. The program was created specifically for homeowners with conventional loans owing more than the current value of the property. These “underwater” borrowers must meet specific FHA requirements, and lender participation in the program is voluntary, but qualified underwater home owners | more...

May 5, 2011

FHA Loans: How Important Is My Credit Record?

By Joe Wallace

FHA guidelines state that a loan applicant’s credit record is one of the most important indicators of how well the borrower might do with an FHA mortgage. On-time payments on past and present credit debt and other financial obligations tell the lender and FHA a lot about “a borrower’s attitude toward credit obligations and predicting a borrower’s future actions” according to the FHA official site. That said, the FHA instructs lenders to “examine the overall pattern of credit behavior, rather than isolated occurrences of unsatisfactory or slow payments”. That is a good indication of the FHA approach to credit history and approving FHA loan applications. According to the FHA, a borrower should not be penalized for one-time mistakes or situations that could otherwise be interpreted as “bad behavior” on a | more...

May 4, 2011

FHA Cash-Out Refinancing Facts (Part Two)

By Joe Wallace

In our previous blog post, we discussed the rules for FHA cash-out refinancing loans. The FHA allows cash-out refinancing for qualified borrowers. Those qualifications include a requirement for the existing mortgage to be current. FHA