Articles Tagged With: FICO Score Requirements

July 29, 2015

FHA Loans And Your Credit

A reader got in touch with us this week to ask if it is possible to get an FHA mortgage loan even if the borrower doesn’t have “perfect credit”. While it’s not clear what the reader means by that phrase, we can answer the question in a general way. The simple answer is yes, borrowers can apply for and get approved for FHA home loans with less than perfect credit, but much depends on the nature of the credit issues on your report and whether there’s an overall pattern of responsible credit use the lender can use to justify approving your home loan. FHA loan rules are clear that individual mistakes in a borrower’s past should not be the sole determining factor when it comes to approving or denying an | more...

July 14, 2015

FHA Loans And Your Credit History: One Important Thing To Remember

By Joe Wallace

Are you planning to apply for an FHA home loan soon? There are many credit issues to consider when planning for your mortgage–avoiding new lines of credit before applying, eliminating lines of credit you no longer need or use, checking your FICO scores, etc. But there’s one easy-to-overlook thing all borrowers should do before applying for a new home loan: Review your payment history on all financial obligations. It is highly recommended that borrowers have 100% on-time payments on all bills 12 months prior to applying for a new home loan. That 12 month payment record will definitely be scrutinized by your lender and it’s a very important factor in loan approval. This is true in all cases, but it’s especially relevant for borrowers who have worries that their FICO | more...

June 30, 2015

Planning For An FHA Home Loan? Pull Your Credit Reports For Free

By Joe Wallace

If you are in the planning stages before purchasing a new home with an FHA mortgage loan, it’s a very good idea–strongly recommended, in fact–to pull your credit reports from the three major credit reporting agencies. It’s best to request copies of your credit reports as early as possible in the process so that you have abundant time to dispute any outdated information, investigate evidence of identity theft, etc. Many people in this stage go to the official sites for the three major agencies–Equifax, Experian, and TransUnion. But did you know that federal law permits borrowers to get a free credit report from these three agencies once every 12 months? According to the Federal Trade Commission official site (https://www.ftc.gov/), anyone who wants the free reports can order them from annualcreditreport.com, | more...

Can I buy a manufactured home with an FHA loan?

June 4, 2015

FHA Loan Credit Score Requirements: A Commonly Asked Question

By Joe Wallace

One common theme we find when fielding some questions about FHA home loans involves FICO score requirements. It’s true that FHA mortgage loan FICO score minimums are often lower than the requirements of some participating FHA lenders, but some borrowers get confused about FHA loan FICO score requirements in general–never mind what minimum number the FHA might accept versus what the lender might accept. One variation on a commonly asked FHA loan question goes something like this: “Does your actual FICO score matter as much as the details of your credit report? It sounds like the number on your FICO score isn’t that crucial compared to your credit history in the last 12 months leading up to the loan.” The idea that your FICO score itself “doesn’t count” as much | more...

May 28, 2015

FHA Loan Pre-Approval and Credit Scores

By Joe Wallace

One question that comes up frequently when talking FHA loans involves whether or not a borrower’s credit scores are affected by applying for pre-approval for an FHA mortgage loan. While we aren’t experts in credit reporting, and the FHA loan rules found in HUD 4155.1 do not address this issue, a bit of research into this issue turns up some interesting facts. According to the Kiplinger Magazine’s, “Could Mortgage Preapproval Hurt Our Credit?”, any kind of loan application has the potential to “ding” your credit rating. That, Kiplinger reports, is according to Barry Paperno, consumer operations manager for Fair Isaac (the company that created the FICO score system). “Typically, you would see a drop of five points or less,” says Paperno in the Kiplinger piece, which adds, “…when lenders request | more...

When Is An FHA Loan Better Than A Conventional Loan?

May 19, 2015

FHA Loans, Foreclosure, and Credit Reports: A Reader Question

By Joe Wallace

A reader asks, “Suntrust Mortgage foreclosed on me in 2010. I had asked for a loan modification and they closed anyway. I had an equity line and I just found out that was placed on my credit report. I found out that my home sold for more than the 1st loan but they never paid the 2nd line of credit, both being with suntrust. when I call suntrust, all they say is any information given will be used to collect a debt. I do not owe that amount on my credit report and they will not do anything about it.” “I am one of the 2,200 in north Carolina that was foreclosed on improperly. I will be retiring from a local government office soon and cannot get a loan due | more...

May 9, 2015

FHA Loans, Your Credit Report and the Debt-To-Income Ratio

By Joe Wallace

A reader asks, “My question is about what debt matters and witch debt doesnt.I have 4 debts that have been removed from my credit report according to credit karma and 1 credit card that is closed but I owe 1100 dollars on.” Any current debt (outside of student loans under qualifying deferment plans and qualifying medical debt which may be viewed by the lender in a different way depending on circumstances) may affect a borrower’s debt to income ratio calculation for an FHA loan. Anything that has dropped off your credit report won’t be an issue–if it isn’t on your credit record chances are it’s not a factor in the loan approval process unless there’s some record of missed or late payments associated with the accounts that does exist. When | more...

May 7, 2015

FHA Loans And The Credit Review

By Joe Wallace

We get many questions about FHA loan applications–questions that involve credit, FICO scores, FHA loan standards, and more. Many borrowers aren’t sure about whether they have FICO scores high enough to qualify for an FHA mortgage, and others may wonder if having a history of late or missed payments could hurt their chances at an FHA home loan. In general, borrowers are encouraged to wait to apply for an FHA mortgage until they have 12 full months of on-time payments on all financial obligations. This brings a potential home loan borrower closer to FHA loan approval; anything less can put your loan application in danger. Why? It’s good to know the FHA stance on these issues, and the FHA loan rulebook does spell out the reason why such a premium | more...

May 5, 2015

FHA HECM Loans: Basic Details You Should Know

By Joe Wallace

If you are a qualified borrower aged 62 years or older and either own your home or are very close to doing so, you may be eligible for an FHA Home Equity Conversion Mortgage (also known as a HECM loan). HECM loans, also known as reverse mortgages, feature money back to the borrower and no mortgage payments. The HECM loan normally comes due and payable when the borrower dies or sells the home. According to the FHA official site, the type of homes eligible are strictly residential in nature with an occupancy requirement for the borrower: “To be eligible for the FHA HECM, your home must be a single family home or a 2-4 unit home with one unit occupied by the borrower. HUD-approved condominiums and manufactured homes that meet | more...

May 5, 2015

Are You Ready For An FHA Home Loan?

By Joe Wallace

If you are considering an FHA home loan, are you ready to fill out the paperwork? Here are some important questions to ask if you are considering applying in the near future: What’s My Credit Score? If you don’t know your current credit score, chances are good that you are not prepared to begin filling out FHA loan paperwork. Before you commit to applying for a new home loan, it’s strongly recommended that you pull your most recent credit report, check your FICO scores and see what your lender will see when he or she requests the same information. If you don’t know what the lender will see, find out before the bank does. What Does My Payment Record Look Like? Have you missed ANY payments in the 12 months | more...