Monthly Archives: May 2012

FHA 203K Mortgage – The FHA Home Loan Program For Fixer-Upper Homes!

In latest reports, home ownership rates have raised continuously due to the implementation of the FHA Home Loan Program. Acquiring homes continues to be made a lot easier mainly because of this particular advantage. But if you want to buy a home that needs repairs the best way to finance it is a FHA 203K Mortgage.

83312671Through the years, FHA has aided Americans to realize their rights in buying the houses which they desire. Sensible home loan rates for middle class, creating property for the seniors and people with lower earnings, and funding military housing are only some samples of what the FHA has been doing on their behalf. But one of the best ways to finance or refinance a home that needs a lot of repairs is a FHA 203K Mortgage.

The full course of action starts with the loan companies advancing the mortgages to those whom commonly could not purchase a home devoid of their support. However, these individuals have got to satisfy the FHA specifications just before they can be provided with the mortgages which they may be trying to get. One qualification they have to satisfy is that they ought to possess a good credit score ranking.

When they have a poor credit history, they may have difficulty having their application accepted. Whenever they do have it accepted, it may mean that they will have to pay out an increased rate of interest when compared with anyone who has favorable credit history. FHA does have more lenient credit requirements than conventional loans.

Furthermore, FHA loans provide advantages to the people who desire to get houses but can’t make down payments simply because they may be fresh college graduates, newlyweds, or individuals who will be still attempting to finish their schooling. The down payment for FHA Home Loan Program is only 3.5%. Additionally, there are several loan companies whom make it possible for folks having bad credit score to be eligible nevertheless. They are aware that these individuals are marred by foreclosure or bankruptcy nevertheless they are going to provide them with an additional opportunity.

The FHA 203K Mortgage is one among the most favorite FHA home loan. There is a fixed interest rate and this is the most perfect for first time home buyers. It enables the people pay up to 96.5 percent of their entire mortgage loan. What this means is the down payments are managed on a controllable level and also the settlement costs will also be at a minimum.

The FHA 203K Mortgage is the only mortgage loan where the sum of the settlement costs might be provided as gift from family, employer, or non-profit or governmental agency.

Nonetheless, the guidelines to consider in this entire transaction whenever working with the FHA 203K Mortgage is that there exists a minimum income requirement. The person should be eligible for this prior to be given an FHA 203k loan.

Your debt ratios can also be specific, based upon on the state he could be residing in. The FHA 203K Mortgage is a good investment decision since one can possibly obtain the house he’s been seeking and have the repairs rolled into their mortgage.

The best place to do more research on the FHA 203K Mortgage and other FHA Home Loan Program loans is the Internet. You will be able to find websites with additional information that will help you buy your dream home even though it does need repairs!

An FHA Loan Could Be A Recent College Graduate’s Best Friend When It Comes Time To Buying A Home

A recent college graduate who is trying to secure a California home loan, or a loan in any state for that matter, needs a loan program that has flexible guidelines. An FHA loan offers that flexibility when it comes time for qualifying for the home loan.

83312670Being that the graduate recently attended school, they are not required to meet the entire two year work history requirement that a Fannie Mae or Freddie Mac conventional loan requires. An FHA loan will allow school attendance credit towards the two year work history.

Being in the workforce full time for one year coupled with the prior year being in school satisfies the two year work history guideline, which again many conventional lenders of today aren’t allowing. If the home buyer is working in the field in which they received their degree, that would help the overall chance of getting approved for a home loan, however it’s not necessarily required. Lenders and underwriters may have differing views and rules when it comes to this scenario so it’s wise to check first with your Loan Originator before you enter into a loan application to how this situation is viewed before they pull your credit report.

In addition, an FHA loan may allow for longer employment gaps. For example, if the graduate decided to take three months off after graduation prior to gaining employment, FHA is more lenient than Fannie Mae conventional lending.

Also FHA may allow non-occupant co-borrowers, conventional loans don’t. If the bank of Dad and Mom runs dry after paying years of college tuition, and they aren’t able to donate a cash gift toward buying a home for their child, they can go on the loan to aid in qualifying for the home loan even if they aren’t going to be living in the property. Again conventional Fannie Mae and Freddie Mac loans do not allow this.

These FHA guidelines are nothing new but with today’s ever changing Fannie Mae and Freddie Mac lending environment it’s easy for real estate professionals to forget them and most consumers don’t know these differing rules even exist. FHA is here to stay and consumers and real estate professionals need to remember that even with these looser guidelines, including accommodating lower credit scores, the interest rates are very close to what Fannie Mae and Freddie Mac conventional loans offer. So whether you’re a college graduate or not, this is valuable information for all prospective home buyers to know prior to searching for a home to purchase.

The Top 10 Things You Need To Know About An FHA Streamline Refinance Mortgage Loan!

You have made the right decision to start doing your research on the FHA Streamline Mortgage Refinance option that is available through the Federal Housing Association.

83266451There are a few “Must Know” Tips about the FHA Streamline that you will want to consider and keep in mind as you are making your decision with whether to move forward or not.

1.) How long have you had your current FHA loan? If your loan was endorsed by FHA before June 1, 2009 your chances of maximizing your savings with the Streamline Mortgage is very high.

The reason that the date is important is because FHA decided to increase its monthly mortgage insurance in 2010. Unfortunately… not only did they decide to increase it… they decided to more than double it!

So, if you decided to do just a standard refinance or purchase after that date – the PMI is outrageous.

But, in June 2012 – FHA decided to help out current homeowners that have been struggling with plummeting property values. At that time, FHA rolled out the newest guidelines that say if you received your FHA loan before May 2009 then you can qualify for the new Streamline Program with the “rolled back” Mortgage Insurance Premiums that are real similar to what they were when you took out the loan.

This is a HUGE advantage over others who are thinking about refinancing their FHA loans who have had them for shorter time frames.

2.) Secondly, not only did FHA say that the monthly MI would be less… but they also decided that the Upfront¬†Funding fee would also be a fraction of what it normally is on new loans. This is another benefit to the¬†FHA Streamline Refinance guidelines that were rolled out in June 2012.

3.) One thing to keep in mind though is what you want to do with your closing costs. With most loans you can include them into your loan – simply financing them. With the Streamline Program, FHA will not allow you to do that without having an appraisal completed so you have two options. First, you can pay them out of pocket and bring some cash to closing. Or, Secondly you can take a slightly higher than market interest rate and ask your loan officer to give you a “lender credit” to cover the fees and title work.

Most lenders will have this option, and if they don’t you may want to shop around. The lender credit is a great tool for homeowners to utilize.

4.) FHA Streamline Credit Requirements: Ok, you may be wondering what kind of credit scores are required for the Streamline Mortgage Refin. Well, the answer is across the board… each bank is going to require different credit scores. Some require a 660, some require a 640, and I have seen a few allowing scores in the high 500 range.

Keep in mind, that the lower your scores are – the better chance that your interest rate will be slightly higher than the teaser rates that you see on TV, mail, and internet.

5.) FHA Streamline Appraisal Requirements: Everyone always wants to avoid having an appraisal done – and the Streamline Mortgage is the best way to avoid it. If you have decent credit scores and are willing to work in your closing costs with the lender credit or bringing cash at closing (as mentioned above) then this is a fantastic option for you.

Having no appraisal is a HUGE deal for FHA homeowners living in California, Florida, Arizona, Nevada, and other “high Depreciation” states. Getting past the appraisal requirements is a great way to save money and to avoid risking your hard earned money on an appraisals that may – or may not – come in where you need it to.

6.) FHA Streamline Income Requirements: If you are considering the FHA Refinance than your income will be verified to simply check to see if you are still employed or have an income stream. Your debt ratios are not analyzed in most instances.

7.) FHA Streamline Refin Processing Time: Most lenders can process a Streamline Mortgage Refin quicker than other loans. Some in as little as 10 -12 days. If your lender is telling you 60-75 days to refin your loan than it is time to start shopping around again. Some banks are so backlogged with loans they are putting refinances on the backburner while they finish up the more “important” purchase deals that they have in the works. Don’t let your Loan Officer do this to you… keep shopping around if you are told more than 3 weeks to close your Streamline Refinance.

8.) FHA Streamline Refinance Mortgage Closing Costs: Keep in mind, a Streamline Mortgage is a reduced documentation loan. Since it is less work then your fees should be less as well. If a lender is trying to charge you more than $1000 in lender fees than you will definitely want to keep looking around. You can find a lender doing these on a regular basis for $600 or less.

9.) Escrows: Yes, you will need to set up your new escrow account… and depending on your monthly taxes and insurance this fee could look pretty daunting on Streamline Refinance.

Even though this is a big fee, keep in mind that you will get your CURRENT escrow balance back from your current lender. This usually gets refunded to you about 3 weeks after you close on your new loan. With you getting your escrow balance back then this makes the new escrow fees almost a wash.

Don’t let that be a discouragement, despite the fee the FHA Strealmine Refinance will still save you thousands in the long run.

10.) FHA Mortgage Term: FHA is strict with this program… if you are going to utilize the Streamline Mortgage, you will be required to keep the same term or longer than the one you have now. If you are on a 30 year term now… you will have to stay on the same term. You won’t be allowed to change it to a 15 or a 20 Year without an appraisal.

Home Loan Modification Vs FHA Loan Refinance – Learn the Difference

If you are among the mass of American homeowners stressed due to the current economic downturn, learn what steps to take to be sure your mortgage is covered. You need the facts regarding home loan modification versus FHA refinance from a qualified financial advisor.

82960183Homeowners feeling trapped due to home mortgage loans may benefit from one of two opportunities: loan modification and FHA refinance. The best fit for your particular circumstances depends mainly on which insurer covers your loan. Ask your lender. The big three are Freddie Mac, Fannie Mae, and the FHA (Federal Housing Administration). Congress authorized these organizations to cover home loans in full. Thus lenders minimized exposure to bad debt, while providing you with the benefits of a decent rate.

There is not much difference between FHA loans, and Fannie Mae/Freddie Mac loans. All that really counts is who covers your loan. This determines your options to restructure your loan to make it more manageable. President Obama’s current Making Home Affordable mortgage loan modification works with Fannie Mae and Freddie Mac. The Hope for Homeowners plan allows for refinance of FHA loans.

Many who were previously disqualified for refinance now qualify under Hope for Homeowners. The current drop in home prices made many Americans ineligible for much-needed refinance. Of course, home equity has dropped along with home market values. When values plummeted below twenty percent of equity, traditional refinance became unavailable.

The Making Home Affordable incentives mean predictable steps to a reduced monthly payment via loan modification. These incentives provide payments to borrowers and lenders alike, to increase the number of approved loan modifications while encouraging a stable economy. For FHA-backed borrowers, loan modification is available, though not via MHA. For an FHA loan restructuring, the processes are neither so streamlined, nor so strict.

Home Loan Options With Bad Credit Can Include an FHA Loan

The real estate sector was once the pride of the lending institutions, with generous offers made available to practically everyone. The idea was to increase their revenue from home loans, but as we all know now, that plan backfired and has left the economy reeling since. That fact has not removed the need for home loans, but given the financial realities today, home loans with bad credit have become more common.

82959795With the events of the past few years, there are now less options open to those seeking to have home loans approved despite bad credit. Many of the institutions took such serious hits, they are now gone, while others no longer have the resources to make for sound lending at all.

When it comes to finding a loan to purchase a home, it is now considered a wise option to turn to the Federal Housing Authority, or FHA, and seek a loan from them. In light of the fact that the regular lenders got so much wrong in recent years, there is certainly a peace of mind that comes with the FHA association.

Advantages of FHA Loans

For those who are not aware, the FHA offers a high level of security to home buyers by providing assurance over the stability of their associate lenders. The security is provided through the government backing that its home loans with bad credit receive, with the fact that FHA loans are only issued by approved lenders with that government guarantee.

The principal reason that this level of security is considered so valuable is that it lowers the risk that lenders have to face. This then helps to build their confidence, which in turn helps to relax some of the terms of any loans, ultimately making it easier to get home loans approved despite bad credit.

There are no prizes for stating that getting a loan to purchase a home is not simple under any circumstances, what with the sheer size of the investment. So it can only be good news to learn the FHA loans are available at all.

Government Guarantee

In truth, the value of government approval is huge in the financial sector, so to have the Government provide a guarantee to home loans with bad credit is a huge boost to the lending industry as a whole. The backing provided relates quite literally to the provision of a guarantor for any loans. So, should the borrower fail to may repayments, and default on the loan, the government will buy back the loan from the lender at the existing market rate.

Of course, the benefit for those seeking to buy a home is to have a reliable source from which to get home loans approved despite bad credit. It therefore increases the numbers of people able to get a loan to purchase a home, which can slowly rejuvenate the housing sector.

Other Options

Despite such an ideal situation, it is still possible to see an application for home loans with bad credit rejected. There are, after all, criteria that need to be met before any loans are granted. It is worth considering other options, such as refinancing an existing home loan.

After years of repaying a loan, and with the fact that interest rates have fallen, there is some scope available with which to refinance the loan and save money. When attempts to get a home loan approved, despite bad credit fail, this is clearly a worthwhile option.

Of course, this is not available to first time buyers, making it necessary to get a loan to purchase a home. Shopping around can ensure the best possible is found, but there can be no doubting that home loans with bad credit from FHA approved lenders are amongst one of the better options available.