Posts Tagged ‘FHA Home Loans’
When it comes to qualifying for a home mortgage loan, there are many different types of programs available. With the many different home loan programs available, it is important to choose the best program for your particular home mortgage loan needs.
One of the home programs you can choose from is a FHA home mortgage loan. This type of program is designed for 1st time home buyers. FHA home loans can be used to purchase a primary residence or refinance an existing home loan. Below are the many benefits to the FHA program.
Lower Down Payment
A FHA mortgage loan offers buyers a program with a lower down payment. The current minimum down payment for a FHA home mortgage loan is 3.5%. The source of the funds for the down payment can also come from many different sources including a gift from a family member or church, a 401K loan or withdrawal, and any money saved up in a checking or savings account. By allowing the down payment to come from many different sources, the FHA mortgage program helps buyers purchase their new home.
Seller Paying up to 3% Closing Cost
FHA loans also allow the seller to contribute up to 3% towards buyers closing cost. This is extremely important in assisting a buyer purchase a new home and reducing the amount of funds needed for closing. Sellers can pay closing cost, prepaid items like taxes and home insurance as well as interest on the loan. For example, if a buyer purchases a home for $300,000, the seller can contribute $9000 towards the buyers closing cost.
Lower Loan Rates
For many buyers, FHA loans offer the most competitive rates. FHA mortgage loan rates are not tied to credit scores like the way conventional mortgage loan rates are. For example, if a homebuyer has a credit score of 660, the FHA mortgage loan the rate would be same if their score was 740, but on a conventional home loan, the credit score of a 660 compared to a 740 would see an increase of about .75% to the rate.
Mortgage Insurance
Another benefit in the FHA mortgage loan program is the approval of mortgage insurance. FHA home loan mortgage insurance is approved as long as the home loan is approved. This is not the same when it comes to a conventional home mortgage loan. Many times, a borrower can be approved for a conventional home mortgage loan, but will not be approved for mortgage insurance. This results in the entire loan being denied, but with a FHA home loan, as long as the loan is approved, mortgage insurance is approved. Also, the monthly mortgage insurance payment for a FHA mortgage loan is usually less than the private mortgage insurance offered on conventional home mortgages.
Mortgage Loan Amount Limits
FHA loans do have set loan limits that are established by HUD. To determine the loan limit in your area, contact your home loan advisor. For example, in the Dallas – Fort Worth area, FHA loan limits are $271,050.
Streamline Refinances
Finally, one of the best benefits to a FHA mortgage loan is the ability to do a streamline refinance. A streamline refinance is when a client refinances an existing FHA home mortgage loan into a new FHA home loan. The streamline refinance program allows the homeowner to refinance with limited paperwork. Though, it might be in the best interest of the client to consider a full refinance over a streamline. Consult a mortgage loan consultant to see which program is best for you!
FHA loans are a great way to purchase or refinance a house. It is always important to understand the benefits of each home loan program that you are applying for and to make sure you are getting the best possible home mortgage loan.
David White is a mortgage officer with over 10 years experience. He specializes in FHA Mortgage Loans. Begin the FHA Home Loan process today. Also published at Benefits For A FHA Home Loan.
When it comes to getting qualified for a home mortgage loan, a bankruptcy can play an important role in your ability to get approved. There are many factors that a bankruptcy has on the mortgage loan process. Knowing what to expect can help you improve your chances for a home loan approval.
The Waiting Period
If you have filed bankruptcy, it will be more difficult to get approved for a loan. Many loan programs will require a waiting period from the time the bankruptcy has been discharged before the mortgage loan can be approved. Depending on what type of bankruptcy that you filed will depend on how long the waiting period will be. If you filed a chapter 7 bankruptcy, then you will have to wait at least two years from the discharge date before the mortgage can be approved. The two year waiting period is based on a FHA home loan. A conventional home loan will require a four year waiting period.
If you have filed a chapter 13 bankruptcy, the waiting period is still the same on a conventional home loan, but on a FHA mortgage loan, there is a way to finance a property while still in chapter 13 bankruptcy. FHA loan programs will consider the filing date when calculating the waiting period. A chapter 13 bankruptcy client can get approved for a home loan after one year from filing the bankruptcy. Since many people are still in chapter 13 bankruptcy after one year, you must get approval from the trustee of your case, that you can add a new debt like a mortgage loan. Without the trustee approval, you will not get approved for the mortgage loan.
All mortgage approvals with clients still in chapter 13 bankruptcy require manual underwriting and must follow the FHA loan guidelines.
Reestablishing Credit
For many clients that file bankruptcy, the toughest step in getting a loan approved is that many lenders require that the customer has reestablished a good credit history since the bankruptcy. The reestablish credit history must also show no new derogatory accounts since the bankruptcy. For example, if you have a bankruptcy that was discharged in 2008 and in 2009, your car was repossessed, then you will not get approved for a mortgage loan.
Reestablishing credit history usually consists of at least an auto loan and a revolving credit account. Make sure to keep your revolving account balance below 10% of the actual credit limit. Home loans require the reestablishment of credit for approval.
There are other mortgage loan programs besides FHA mortgages and conventional mortgages that have different guidelines when considering a bankruptcy. These types of home loans are considered non-traditional loans and many of these programs require a larger down payment. Loan rates on these programs are also usually 2 to 3 percent higher than a normal conventional mortgage loan.
Avoid New Derogatory Credit
The most important thing to remember after a bankruptcy is to reestablish credit and do not have any new derogatory accounts since the bankruptcy was filed. You want to show the lender that the bankruptcy was an once in a lifetime event and will not happen again. If the loan company believes that there is a habit of bad credit or the likelihood of filing bankruptcy again, the home loan will be turned down.
Bankruptcy is not a mortgage killer, but if you have filed bankruptcy in the last seven years, it is crucial to make sure that you are doing everything necessary to have good credit, especially if you want to purchase and finance a new home.
David White is a Sr. Mortgage Specialist who helps his clients with their Home Loans. David specializes in FHA Home Loans which helps customers who have filed bankruptcy in the past. David has over 12 years experience in the finance industry.
