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
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 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.
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.”
Filed under FHA Articles, FHA Guidelines, FHA Mortgage Articles, FHA news · Tagged: FHA lending, FHA mortgage insurance, FHA requirements
Why would HUD decide to raise FHA mortgage costs at a time when the economy and the housing sector nationally are struggling so much? Just a few years ago, FHA home loans were considered a financing dinosaur. FHA loans were nearly considered obsolete because they were time-consuming and more regulated, and sellers were usually not comfortable with FHA financing being written into the sales contract, because they knew at the time that the appraisal requirements and timeline for underwriting would drag out the process for closing the loan. Times have changed, and FHA has automated the FHA home loan process.
Today, an FHA mortgage remains the only low down-payment lending product, requiring just 3.5% from borrowers. Just five years ago, FHA loans had a market share of only 5%. In 2010, FHA lending accounts for about 30% of all home loan originations nationally. This surge of mortgage loan volumes has increased the pressure on the FHA Mortgage Insurance Fund. FHA is required to maintain this emergency fund of reserves above 2% based on all of its insured mortgages. This year we saw the reserves fall well below the 2% minimum and HUD has been forced to take drastic steps, like tighten the FHA guidelines.
FHA Mortgage Lending Back in Style
In an effort to preserve the sacred FHA loan program, HUD announced it will be raising its annual mortgage insurance premium from 0.55 % of the mortgage amount to 0.90% (for loan to values higher than 95%) or 0.85% (for LTVs lower than 95 %). This insurance premium hike will go into effect, October 4th, 2010. In an effort to save face, FHA will be lowering their upfront mortgage insurance to compensate homeowners for their rising monthly payments. This is good news for new homebuyers because the fees are dropped to 1% of the loan amount from 2.25%. Overall, it looks to add $300 million a month to the insurance fund by taking these actions.
FHA Borrowers to Pay More Monthly
So what does that mean to FHA buyers come October? It means they will be paying more each month. For example, let’s take a $250,000 purchase. Under the current FHA mortgage insurance framework, the upfront premium would be $5,428 for a total loan amount of $246,678. The monthly mortgage insurance would be $110.57. Take an interest rate of 4.625%, and the principal and interest payment would be $1,268.27. Add the $110.57 and you get $1,378.84.
Under the new FHA requirements, the new upfront amount would be about $2,500 on a FHA mortgage loan amount of $250,000. However, the monthly insurance jumps to $180.94. Take the same interest rate, and the principal and interest payment decreases to $1,252.76. But with the higher premium, that total payment comes in at $1,433.70, an increase of almost $55 a month. To a borrower who is just barely qualifying, that can have an effect. It also puts into play taking another look at private mortgage insurance as an alternative for the borrower. These types of adjustments shouldn’t be surprising as FHA tries to adjust to the marketplace. It recently released its quarterly report to Congress, and it shows just how much FHA has become a part of the mainstream when it comes to mortgage lending.
The FHA Loan Pros suggested that former Treasury Secretary Hank Paulson was in favor of limiting FHA mortgage lending to lower income Americans that were seeking with reduced home loan amounts. They believe he wants to keep the price of the insurance commensurate with the risk being taken on the FHA loans. In other words, take FHA back to where it was only a few years ago, when private lending was as attractive or more attractive to most borrowers and FHA had a relatively small part of the market. Today, most FHA lenders are willing to take on the kind of risk FHA does would have to pay its investors a lot more to make those loans than FHA currently pays its investors. The playing field must be leveled and our infatuation as a society with home ownership must end.
Filed under FHA Articles, FHA Mortgage Articles, FHA Mortgagee Letters, FHA news, FHA refinance, Mortgage Reform, Mortgage Rescue Articles, Published Articles · Tagged: FHA mortgage relief, FHA refinance guidelines, mortgage relief companies
FHA borrowers have refinance options that enable struggling homeowners to avoid going the loan modification route. There is nothing wrong with getting a loan modification, but you can expect the process can take 6-12 months and you risk you losing your home in the process. Just last week, the New York the state attorney general, Andrew Cuomo, has sent cease and desist letters to more than 200 loan modification companies. The FHA loan Pros published an article that discussed how FHA customers could get relief without getting tangled up with mortgage relief companies. They pointed out that laws for mortgage relief companies vary by state but Cuomo reached out to homeowners with FHA mortgage relief insured by HUD.
The NY attorney general’s office said “Mortgage relief companies target homeowners facing foreclosure by promising to restructure their home loans with an affordable loan modification. Cuomo accused these mortgage relief companies of operating in deceptive practices that lure distressed homeowners to pay them for mortgage relief services, yet they often fall short to modify the mortgage.
The FHA Mortgage Solution
First of all FHA has been helping struggling homeowners since 1934. With their flexible FHA guidelines, HUD has been a leader in the foreclosure prevention arena. FHA has solidified a good reputation for rectifying FHA loans in default. In 2009 the FHA annual report says that “82.7% of the FHA mortgage loans that were 90 days or more delinquent were brought under control.”
To get FHA mortgage relief, you need to contact a HUD foreclosure avoidance counselor at http://www.hud.gov/offices/hsg/sfh/hcc/fc/. There is no fee for their mortgage relief services so you have nothing to lose. FHA refinance guidelines remain more flexible than conventional loan programs. For borrowers who don’t have much home equity, they may still qualify for a rate and term FHA refinance at 96.5%.