Terry Edwards asked:




Are you considering an FHA reverse mortgage loan on your home? While there are many advantages to these types of loans, there are also some things you must know before moving forward with this loan.

FHA stands for the Federal Housing Administration, which is a branch within the United States Department of Housing and Urban Development (HUD). In order to qualify for this mortgage program, their are certain requirements the FHA has set. One of those is that the homeowner must be at least 62 years of age, or older. The FHA also provides insurance which makes the loan program less expensive for the borrowers then similar reverse mortgage programs offered by private lenders and smaller institutions.

The only other requirement the FHA ask of you, other than being 62 years of age or older, is that you have equity in your home and little debt or mortgage against it. There is no other restrictions, required credit ratings, level of income or any other assets needed. If you are approved for an FHA reverse mortgage loan you can receive your loan in one of three options. You can take it all in one lump payment, in monthly installments for a fixed term, or indefinite term as a line of credit against the loan.

An FHA loan is paid off either when the homeowner passes away, moves out of the home, or sells the property. Then, HUD collects the proceeds from the sales. If those proceeds exceed the loan, then the difference is either awarded to the homeowner, if he is alive, or to the homeowner’s heirs. If the proceeds do not cover the amount of the loan, then HUD covers the difference.

The main benefit of these loans are that the homeowner is not required to make monthly payments against the loan. That is why they call it a reverse mortgage — because instead of you having to make payments each month, the leading institution is making payments to you — whether monthly, in one lump sum, or when you use it as a line of credit.

The way the amount of the loan is calculated has to do with the value of your home, the interest rates, the location of your home, as well as your age. These are some of major aspects of an FHA reverse mortgage to keep in mind.

Bradley

Shaye P asked:




Credit requirements for FHA Loan are comparatively less stringent as compared to

Conventional Mortgage Loan VA Mortgage Loan USDA Home Loan

The first thing to understand is that there is no specific score requirement specified by FHA. The loans are underwritten based on overall credit profile of a borrower. Most lenders use automated systems like Desktop Underwriter by Fannie Mae or Loan Prospector by Freddie Mac, along with investor specified credit score requirements, to determine eligibility. If the loan is auto approved by DU or LP and score requirements are met then other factors like lates (Not Mortgage Lates), collections, charge offs are accepted, relatively easily, by underwriters. Generally a prospective Buyer may not like to pay charge offs or old collections and this may be possible on an auto approval.

Judgments and Tax Liens

Judgments and Tax Liens are a different ball game since these affect title. A 12 month history from IRS may be accepted by certain lenders and prospective Buyers may not be asked to clear the entire outstanding tax Lien in one go. Judgments normally need to be paid.

Credit Scores 640 + or 620 +

Credit requirements required by majority FHA Home Loan Lenders has already been increased to 640 for the past few months now. The earlier score requirements were 620. There are some lenders who will finance borrowers with 620 + fico. There are no additional pricing hits for FICOs being below 640 and above 620.

Credit Scores Below 620

Few FHA Home Loan lenders will accept such borrowers, if they have NO NEW lates in the last 12 months. Any new collections or charge offs opened as a result of lates before the last 12 months are considered OK.

No Active TradeLines or No Scores

The same principle applies. Some FHA Home Loan lenders will accept such borrowers if they have NO NEW lates in the last 12 months. Any new collections or charge-offs opened as a result of lates before the last 12 months are considered OK only if Non Traditional credit can be established. Non Traditional Credit for 12 months can be documented in the form of Rent payments, Telephone/ Cell phone payments, Electricity, Water, Garbage, Cable, Storage or any other payments made consistently for the last 12 months. Generally a combination of 4 Traditional or Non traditional lines are required.

Prospective Home Buyers should read comprehensive Lending information on FHA Loans, VA Mortgage Loans, USDA Loans, Conventional Loans.

Access the PreQual affordability Mortgage Calculator

Doris

ArmyWife<3 asked:


is there a texas state or federal law stating that the employer is not allowed to give out an employers salary even with borrowers authorization to qualify for a home mortgage loan, more or less, an FHA loan?
if there is please give me a link.
or if there as anything regarding them having to with permission.

Emily