Qualifying for a government loan program like FHA may be more attainable than you may have thought. If you are looking to finance a home, but you are afraid that you may not meet the FHA requirements, the last thing you should do is give up hope and continue being a renter. For some people, especially those with families, there is nothing more fulfilling than owning a house. This means that you have to make the home buying process work for you. The good news is that this is certainly a possibility, but you have to know about the different opportunities available to you. It’s amazing how many people don’t know about the FHA loan programs that are available to help low and middle income families become homeowners by providing them with affordable mortgages. FHA mortgage rates have dropped to levels not seen since Dwight Eisenhower was president.
To begin with, you are going to want to make sure that you have a good income that will make the minimum payments. You will want to think about your other expenses and bills, as well as loans and debts for cars, medical bills, and school.
When you are looking into an FHA mortgage, you will want to begin by considering how realistic it is that you can make the monthly payments. The good news, however, is that you will have the option to refinance your mortgage down the line, but you will have to keep up with your payments. If you are late even once, or if your mortgage is delinquent, you can very well risk not being able to qualify for home refinancing. When this happens, you can lose your home and even have to declare bankruptcy.
In short, when you are thinking about FHA mortgages, you will be able to find some great opportunities to own a house. This is not an excuse, however, to be late on payments or to let your mortgage become delinquent. This means that the federal government offers you a wonderful opportunity, but falling behind has many penalties attacked. This means that you will want to make sure that you do not get in over your head when you are buying that house you have always wanted. Make sure that your hopes and dreams do not cloud the reality of your finances and income.
Brokers and lenders remain nervous as FHA loan requirements may continue to increase in 2011. While fraud risk had trended down dramatically through 2008 and even into early 2009, in mid-2009 and 2010, it started to creep back up again, according to Frank McKenna, vice president of fraud strategy for analytics provider CoreLogic. The increase is a result of high-risk government lending programs like FHA and the Home Affordable Refinance Program. “A lot of those programs are bringing risk back into the market,” McKenna said in a phone interview following the CoreLogic Mortgage Fraud Consortium Members’ Meeting in Chicago. “Lenders said their biggest concern this year is ‘flipping’ again. They are concerned with all of the distressed properties out there like short sales and foreclosed properties. There are a lot of investors that are taking advantage and flipping the properties the same day for sometimes 50%-100% more than the property sold for. They are seeing that as a very big problem right now.”
FHA Mortgage Rates Fell Below 4% on 30-Year Fixed Rates
Government experts from the Federal Bureau of Investigation, Financial Crimes Enforcement Network, Internal Revenue Service and Financial Fraud Enforcement Task Force were on hand to discuss policies and trends. FHA lenders like Shawn Downs, believe that “HUD is doing the best thing for long term security in regards to keeping the FHA loan programs a viable option.” Downs continued, “FHA loans in Colorado are a great option for first time homebuyers, but if too many borrowers default then the program won’t be around for the next generation.”
FHA lenders indicated that in 2010 FHA fraud is “the area that they are focusing in on,” McKenna said. While there is strong underwriting, it doesn’t stop the fraud from happening. FHA is “still very attractive” to the fraudsters and fraud rings because they like to recruit straw borrowers. “FHA guidelines, in terms of who qualifies and how much they have to put down, are a lot more lenient than the typical type of conforming programs. They can recruit young college graduates who don’t have a lot of credit history or people who don’t have great credit history and they only have to put 3% down.”
Bank of America closed their wholesale mortgage lending leaving many FHA lenders and brokers pondering their next step. BofA eliminated mortgage broker access to their FHA loan programs including FHA mortgages. Remember that Bank of America Home Loans abandoned wholesale lending back in 2007, but resumed following their purchase of Countrywide Home Loans. Once again the lending giant has quit wholesale mortgage business.
Other banks have made a similar decision, citing the greater likelihood of broker-originated loans to end up in default. Studies indicate that home loans originated by a bank employee have less of a chance of defaulting based on several other published lender reviews. According to BofA president Doug Jones, “Bank of America remains committed to purchasing and financing FHA home loans from Correspondent Lending companies, including those approved to originate loans from mortgage lenders.” FHA loan rates continue to fall to record levels, so most people in the mortgage industry still consider FHA mortgage lending a significant opportunity looking ahead to loan business in 2011 and 2012.