Hоw FHA Financing Can Help People with Bad Credit Buy a Home

Posted on December 14, 2011 by admin 
Filed under FHA Articles, FHA Credit · Tagged:

With subprime lenders disappearing in the wake of the housing crisis, FHA has taken on a new role to help people with credit challenges finance a home. Тhеrе аrе а fеw obstacles fоr people lооkіng tо finance а house wіth bad credit. Моst conventional lenders аrе nоt interested іn approving purchase loans fоr borrowers wіth bad credit. Маnу people thіnk thаt a mortgage loan fоr people wіth bad credit іs simply а pipe dream аnd impossible tо attain. Ноwеvеr, thеrе аrе a few FHA mortgage lenders thаt are still offering bad credit hоmе loans. Poor credit сеrtаіnlу detrimentally аffесts thе cost оf purchasing а hоmе аnd that’s whу оur lenders аrе extending а hоmе loan fоr people wіth bad credit. Great credit affords borrowers thе best interest rates аnd lowest fees, whіlе bad credit uрs thе fees аnd thе interest rates, аs well аs thе requirements. Ноwеvеr, learning hоw tо gеt а fіrst time hоmе buyer loan wіth bad credit саn gеt уоu оn уоur wау tо owning уоur оwn hоmе іnstеаd оf throwing money аwау оn rent month аftеr month.

More Tips> How to Get a Home Loan with Bad Credit

If уоu wаnt tо knоw hоw tо gеt а fіrst time hоmе loan wіth bad credit, fіrst уоu hаvе tо knоw sоmе оf thе limitations. Тhе requirements fоr а hоmе loan fоr fіrst time homebuyers wіth bad credit change depending оn hоw bad thе credit асtuаllу іs. Ноwеvеr, bad credit hоmе loans аrе еvеn аvаіlаblе fоr people whо hаvе filed bankruptcy оr experienced а foreclosure. Тhеrе іs а waiting period аftеr thеsе occurrences bеfоrе purchasing а hоmе wіth а conventional оr FHA mortgage. Веfоrе thе real estate market crash аnd thе rесеnt economic depression, subprime lenders offered mаnу loans tо borrowers wіth bad credit.

Financing а hоmе wіth bad credit саn bе exhausting, but bесоming a homeowner can vеrу attractive wіth falling hоuse prices combined wіth record low interest rates.

  • Purchase Mortgage Rates starting аt 4%!
  • Low Down-Payments wіth оnlу 3.5% Needed
  • Choose bеtwееn 15 аnd 30 Year Fixed Rates
  • Flexible Credit Guidelines wіth FHA hоmе loans

Increased Down Payments for FHA Mortgages with Less than Perfect Credit

Posted on April 29, 2011 by admin 
Filed under FHA Credit, FHA Guidelines, FHA requirements · Tagged:

Is HUD increasing the FHA down-payment requirements? There are a lot of rumors going around about FHA mortgages, minimum credit scores and higher down-payments so we wanted to clear the air with the FHA Commissioner. In a recent interview, the Federal Housing Administration Commissioner Bob Ryan said, “US regulators should not forget factors like loan to value and credit scores.” Ryan was referring to the new credit score guidelines for the FHA mortgage programs.

FHA made it clear that borrower with low credit scores will be required to have more equity to refinance with FHA. New home buyers who have less than stellar credit scores will have to come up with more money for the down-payments.  For example if first time home buyer had a credit score of 580 the underwriter may require a 10% down-payment rather than the 3.5% that most home loans insured by FHA have. Ryan continued, “Higher FHA down-payments will not guarantee timely mortgage payments from the borrower, but we should see less foreclosures and delinquencies because homeowners seem to take their monthly mortgage payments more seriously when they invest more money into their home.” FHA made their goals known at the recent hearing that focused on mortgage risk retention.  “This definition has the potential to create false- positive situations,” Ryan told lawmakers.

Groups Petition FHA for More Aggressive Home Loan Guidelines

FHA was given a waiver for the new home loan rules outlined in the Dodd-Frank home finance bill.  This mortgage exemption could take the pressure of lenders who are originating FHA mortgages.  However, many real estate companies and consumer watch-dog groups contend the new mortgage rules are not fair as it could restrict credit while making homeownership more difficult for many prospective borrowers. In an effort to stimulate the housing market, this group wants finance regulators to reduce the amount of the down payment rather than raise it. Clearly this coalition is at odd with FHA as guidelines continue to tighten for new home buyers.  With FHA rates still below 5% on 15 and 30 year loans, the motivation for home buying is strengthened even more. Today the current 30-year FHA mortgage rate is available to qualified borrowers with no points at 4.75%.

FHA Loans More Valuable as Assumable Mortgages

Posted on April 28, 2011 by admin 
Filed under FHA Articles, Published Articles · Tagged:

Sometimes an assumable loan can be the deciding factor in someone buying your home. As the FHA interest rates rise, the demand for assumable mortgages will rise significantly.  FHA continues to be one the last home loan program that offers an assumable mortgage for new home buyers. Conventional mortgages and are not assumable and in most cases, neither are sub-prime loans. In most cases, conforming loans have a clause that requires the mortgage lien to be paid in full before it can be sold. The only home loans that offer an assumable option are the VA and FHA mortgages.  Read the original article FHA Assumable Mortgage.

FHA Lending Supporting Subprime Borrowers

Posted on March 1, 2011 by admin 
Filed under FHA news, Published Articles · Tagged:

There continues to be a lot of talk about FHA mortgage lending in the news. The housing sector continues to sputter and interest rates are rising.  FHA home loans are government-insured mortgages that have supported much of the mortgage industry since the sub-prime mortgage crisis, may not be as affordable in the near future. FHA has pledged to raise insurance premiums in April and many approved FHA lenders are reporting higher closing costs and 3rd-party lending fees.

FHA loans are very popular with first time homebuyers and borrower who are unable to qualify because of 10-20% down-payments that are common with traditional loans. FHA is also the go-to loan for borrowers with less than perfect credit. The FHA loan requirements have always been more flexible than conventional mortgages until recently. Many lenders have announced minimum credit scores for borrowers seeking FHA home loans.

FHA requires at least 3.5%, while in most cases conventional mortgages typically require 10 to 20% more. Last November, lenders implemented minimum credit score of 500 and for borrowers that had credit scores below 580 would have to come up with a 10% down-payment.

Many non-prime and bad credit mortgage programs have been discontinued, but for many struggling consumers, FHA is the only chance to qualify for mortgage rate refinancing or home buying because of the flexible credit criteria. Wells Fargo recently lowered its minimum required credit score for a FHA loan to 500 from 600. The National lender also lowered their required debt-to-income ratio to 43%. For FHA borrowers with less than perfect credit, the Wells Fargo increased their minimum down-payment requirements to 10%.

Since the sub-prime mortgage crisis began in 2008, “FHA has been the only haven for borrowers,” said Sean Welsh, a senior loan officer at Campbell Financial Services in West Haven, Conn.  But the agency’s capital reserves have fallen below levels mandated by Congress, which is why the rise in the annual insurance premium was authorized.  Mr. Welsh said the increase, while “not too bad,” was still “additional pain” atop the November change.

FHA Lending in 2011

Posted on January 11, 2011 by admin 
Filed under FHA Articles, FHA news, Mortgage News · Tagged:

FHA mortgage lending continues to play a major role in home financing and refinancing for the American homeowners.  The state of FHA lending remains positive as the loan defaults are declining and interest rates remain more affordable than any other time in deades.

The Department of Housing and Urban Development spokesman Lemar Wooley said in a recent interview with NPR that FHA paid about $12.8 billion on almost 100,000 such claims on foreclosed homes in 2010. The average FHA mortgage was $128,000 per claim.  In 2009 FHA paid on 70,000 claims at an average cost per FHA loan was $117,000 totaling almost $8.2 billion.

Will FHA mortgage loan originations rise in 2011? Most analysts believe that FHA loan originations will decline because rates are predicted to rise. However, the popularity of FHA lending should continue to increase.

It is no secret that FHA home mortgages have become very popular since the mortgage industry crashed in 2006.  Since then FHA mortgage lending has increased about 30% of the total mortgage market-share.  FHA lending continues to have a lower foreclosure rate than conventional mortgages. At the end of the 3rd quarter of 2010, the foreclosure rate for all home mortgages was 4.39% compared to 3.32% for FHA mortgage loans.  FHA rates remain extremely low and the cost for FHA refinancing continues to be less than conventional lending.

Getting Approved for a FHA Home Loan

Posted on October 29, 2010 by admin 
Filed under FHA Articles, FHA Mortgage Articles · Tagged:

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.

The FHA home loan is a unique loan provided and approved by the Federal Housing Administration. There are special interest rates on these home loans for people who might have financial trouble paying for a normal mortgage.  If you are interested in this program, you will want to begin by making sure that you are eligible.

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.

FHA Loan Program Longevity

Posted on October 18, 2010 by admin 
Filed under FHA Articles, FHA Credit, FHA Guidelines · Tagged:

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.”

No More Wholesale FHA Lending with BofA

Posted on October 7, 2010 by admin 
Filed under FHA news, Mortgage News · Tagged:

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.

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