Articles Tagged With: Credit History

October 14, 2022

Why You Should Not Apply For An FHA Home Loan And Other Credit At The Same Time

Plenty of websites, books, and financial podcasts warn about managing your credit properly during the home loan application process. One bit of advice from many of these sites? Don’t apply for a car loan at the same time or just before a home loan. Don’t apply for any new credit during this time for best results. Why? There are several reasons, one of the most important? That your debt-to-income ratio is negatively affected by any new line of credit and a home loan lender will be required to consider that when deciding whether or not to approve your mortgage loan. The minimum payment required each month on the car loan will be factored in with the rest of your debt, and if you significantly change your debt ratio during the | more...

April 14, 2022

Are FHA Credit Requirements For Refinancing The Same As Buying A Home?

By Bruce Reichstein

Are FHA credit requirements the same for refinance loans as they are for buying a new home? Many borrowers want to know if their credit scores, payment history, and other factors will be scrutinized as closely when refinancing. FHA loan rules for refinances vary depending on the nature of the new loan. The rules that govern this area are found in HUD 4000.1, the FHA Single-Family Loan handbook, and lender standards may also apply. The credit requirements we’re discussing here are FHA loan minimum standards. To know what a specific financial institution may require above and beyond these standards, you will need to talk to a participating FHA lender.FHA Loan Credit Check Requirements For Cash-Out Refinance Loans FHA loan rules in HUD 4000.1 state that cash-out and the no cash-out | more...

March 16, 2022

Building Credit Before Your FHA Home Loan

By Joe Wallace

If you want to buy a home, especially if you are shopping for a house for the very first time, you may need to build credit in the year or more leading up to your application. First-time homebuyers who do not have a long credit history do well to consider building credit, which is not quite the same thing as repairing credit. That said, the procedures for building and repairing are often similar. One important thing to remember; you don’t need a credit card to build credit. Some credit reporting agencies give you the option of having recurring payments (such as cell phones, utilities, etc.) added to your credit report. These recurring payments can help establish a pattern of reliable payments, and you will need to make arrangements with each | more...

October 15, 2021

Credit Scores For An FHA Home Loan: When Low Credit Is Not Bad Credit

By Bruce Reichstein

Are you worried about your credit scores for an FHA home loan? When is a low credit score a reflection of bad credit behavior? FHA home loan rules specify that the lender must ensure a borrower as a 500 FICO score at the very minimum in order to qualify for an FHA mortgage, but your credit score numbers don’t tell the whole story. It’s true that FHA loan rule minimums for FICO scores do not always reflect the participating lender’s credit score requirements; borrowers are technically eligible for an FHA mortgage with the lowest possible down payment if they are applying with FICO scores at 580 or higher. The lender may require a credit score of 620 or higher for the same applicants. But your FICO scores only make up | more...

October 8, 2021

Important Issues About Buying A Home With An FHA Loan

By Bruce Reichstein

What are your concerns about buying a home with an FHA home loan? For some, it’s about how much the loan will cost month-to-month, while for others the issue of the loan’s long-term cost can be a worry. If you aren’t sure how the FHA home loan program works, you’ll definitely want to read on. What You Can Buy With An FHA Mortgage In general, FHA home loans are for owner/occupiers who want to buy a home to use as their primary residence. You can buy a property with as many as four units as long as it meets FHA minimum standards and you are financially qualified for the mortgage loan. FHA loan applicants may apply for any type of FHA loan offered by a participating lender including mobile home | more...

September 29, 2021

Do FHA Home Loans Have An Income Cap?

By Joe Wallace

Some borrowers learn that FHA mortgage loans are government-backed and guaranteed by the FHA and HUD, which can lead to certain assumptions about the nature of a government-backed mortgage. One of the misconceptions about FHA home loans is that due to their government association have either an income limit, or are otherwise need-based. Some borrowers might be confusing the government-backed USDA loan program with the FAH loan rules. USDA loans ARE need based. However, FHA loan rules in HUD 4000.1 do not specify a maximum income and do not require a specific financial need to qualify. FHA loans do not have a low-income requirement, a household income cap, or a requirement that you be a first-time buyer. These loans are instead designed for those who want to purchase a home | more...

August 30, 2021

FHA Loan Guidelines For Verifying Your Credit History

By Bruce Reichstein

FHA loan rules have a lot to say about what the lender needs to look for to verify a potential FHA borrower’s creditworthiness. No matter if you are looking for a condo loan, a mobile home loan, or you want to build a house on your own land with an FHA construction loan, the requirements in the FHA Lender’s Handbook are identical. There are minimum FICO score requirements, instructions to the lender for reviewing the borrower’s record on-time payments (12 months of reliable payments on all financial obligations is strongly recommended), and much more. One area that is also covered in HUD 4000.1 is what the lender should do if collections are included in the borrower’s credit history. The presence of a collection action on a loan applicant’s record may | more...

July 30, 2021

What You Need To Know About FHA Home Loan Credit Checks

By Joe Wallace

What do first-time home buyers need to understand about the credit check process for getting an FHA mortgage? There are many variables but one thing you can do to get a better understanding of what it takes to be approved for a loan is to start trying to think like a loan officer–their job depends on making sure that you are a good credit risk. How can you help the lender help you? What you don’t know can hurt you in the journey toward buying that first piece of real estate. Before you begin working with a realtor, you should know several things about the credit check process. Credit is a major part of home loan approval and you want to be able to convince your lender you are ready | more...

June 9, 2021

Have You Checked Your Credit Score Lately?

By Bruce Reichstein

When was the last time you checked your credit score? If you are thinking about applying for ANY line of credit (but especially home loans) you will want to be looking at your credit reports on a regular basis. There are good reasons to monitor your credit and keep track of updates to your report. What kind of reasons? Human error, for one. If your credit report has mistakes like an outdated home address, incorrect spellings of your name or addresses, or other problems those errors could make trouble for you later on. But errors aren’t the only issue to keep an eye on. Credit scores help determine your interest rate on a home loan, and they also help determine what size of down payment you may be required to | more...

March 30, 2021

What Can Kill An FHA Home Loan?

By Bruce Reichstein

Those who want a home loan have to prepare for the new loan application in several ways–financially, through saving up for the down payment and closing costs, and with credit prep. That can mean working on your record of on-time payments, lowering your overall debt amounts, and avoiding new credit in the meantime. When applying for any large line of credit, there are some things that can stop your loan dead in its tracks. If you want a home loan and are worried about being approved for a home loan, add these issues to your mental not-to-do checklist and make sure you know how to avoid them. Avoid New Debt Your lender pulls your credit when you apply for your home loan–most people know that. But not as many know | more...