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- FHA Loans -
Reasons to Consider an FHA
Home Loan-
Why should you
investigate an FHA home purchase? There are many
reasons, especially for people looking at options for
their first home. First-time homebuyers have a distinct
advantage with FHA loan options compared to conventional
loans--it’s easier to qualify for an FHA home mortgage.
FHA home loans are guaranteed by the government, so the
loan application is more attractive to participating
lenders. Many typical first-time FHA home loan
applicants are young and in the early phases of their
careers. Many are still paying on student loans, credit
card debt from college or other debt. FHA home mortgages
often wind up offering less expensive monthly payments.
Another advantage for the first-time homebuyer? FHA home
loans don’t require a big down payment at closing time.
A typical borrower in the early stages of a new career
often doesn’t have a lot of money set aside specifically
for purchasing a home. The terms of an FHA mortgage
includes a 3.5% down payment. That money can come from a
variety of sources including HUD down payment assistance
grants or gifts from family members.
For first time buyers, closing costs are another
consideration. Typical closing costs for FHA home loans
are up to 3% of the total mortgage. An advantage of some
FHA loan product--the terms can allow you to build in
closing costs into your mortgage.
FHA home mortgages aren’t just for first-time home
buyers. FHA refinance loans help people get out of toxic
debt situations caused by sub-prime mortgages with
interest rates that have spiraled out of control. FHA
home mortgage refinancing is a way to keep your home and
prevent damage to your credit rating. The advantages
include a low fixed rate mortgage guaranteed by the FHA,
predictable mortgage payments and better interest rates
for those who qualify.
The FHA also provides cash-out refinancing. Do you need
to set aside money for additional college study or major
home improvement projects? FHA cash-out refinancing
mortgages offer lower interest rates than traditional
home equity financing loans. Consider one of two FHA
mortgage plans which offer cash-out plans; one with loan
amounts for up to 95% of the appraised value of the
home, another for up to 85% of the appraised value. Each
program has its own specific requirements and rules;
your loan officer can inform you of your options under
FHA cash-out refinancing mortgages.
FHA mortgage loan payments should consist of no more
than 29% of your monthly income. The loan officer will
ask for verification of your income to calculate your
debt-to-income ratio with the new loan. It is true that
borrowers can get conventional loans using “stated
income”, but requirements for FHA mortgage products
including FHA refinancing loans require copies of your
income tax returns to verify the actual amount of money
you report to the government.
FHA home loans have requirements for income,
debt-to-income ratios, and maximum loan amounts. The
kind of FHA loan you apply for is unique, there’s no
one-size-fits-all lending product from the FHA. Ask your
lender for assistance in learning which FHA mortgage is
right for you. If you aren’t satisfied with your current
lender, consider getting applying for an FHA home
Things to Know About FHA
Refinancing
Do you need to refinance your existing mortgage? It
could be time to explore your FHA refinance options. Are
you at risk of default? Foreclosure? If you have an
adjustable rate mortgage and are paying much more than
anticipated per month, you should consider going into a
fixed-rate FHA mortgage.
An FHA refinance loan may be right for you if you have
an adjustable rate mortgage that is raising your
mortgage payments higher than you can afford to pay. Is
your income average or below average for the area where
you live? Does your mortgage payment take 31% or more of
your total income? Do you live in the building you want
to refinance? If the answers to any or all of these
questions are yes, it’s time to think about an FHA
refinancing loan.
DOES MY CREDIT RATING AFFECT MY CHANCES?
FHA refinance loans require a credit check before FHA
refinancing is approved. This FHA credit check compares
your overall credit activity to any negative information
in your credit report. To qualify for an FHA loan for
refinancing purposes, your general pattern of credit
activity is taken into account, not just current or past
payment issues. You may be surprised to learn the FHA is
much more flexible when reviewing your credit history
for an FHA refinancing loan.
ARE FHA REFINANCING LOANS AVAILABLE AFTER FILING
BANKRUPTCY?
If you’ve been discharged from Chapter 7 bankruptcy at
least two years, you are eligible to apply for FHA
refinancing. If you filed Chapter 13 bankruptcy and have
made all payments on time for at least one year, you are
eligible to apply for an FHA refinancing loan.
HOW CAN I GET READY FOR AN FHA REFINANCING LOAN?
Always prepare for your FHA refinancing credit check in
the same way you’d get ready for a conventional home
loan. Establish or continue a history of on time
payments, reduce your debt-to-income ratio and cut the
amount of potential debt you have in your name. Also
double-check your credit for current, accurate
information. Challenge items on your credit report which
may be out of date or suspicious.
WHAT IF I ALREADY HAVE AN FHA HOME LOAN?
Do you already have an FHA home loan? Do want to lower
your interest rates?
FHA Streamline Refinancing
is an option to help you do just that. FHA Streamline
loans have no income verification requirements. No
credit report is needed unless your particular lender
requires it. FHA Streamline loans are offered to
borrowers who are current on their payments. Since you
are already established as a good borrower, in the eyes
of the FHA no additional verification is needed to help
you get into a new FHA mortgage product.
You can add another person to the property title with no
credit check, but if you want to remove someone from
your title, you’re required to get a full credit check
before you can be approved for an FHA Streamline
refinancing loan. Contact your lender for additional
information. Income requirements vary depending on your
state of residence and your zip code; you may also find
additional flexibility depending on your credit report
and the nature of the building you want to refinance.
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contact me
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