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

Malcolm Glazer asked:




A mortgage home loan modification is to help those individuals and families who are having trouble making their monthly mortgage payments. These modifications include the applicant making a proposal either by themselves or with the assistance of a third party as to having a new agreement formed with the lender. It is up to the lender whether or not the proposal or the application is accepted. They may enter into negotiations with the borrower or third party to make an agreement that all parties involved will be benefitted from. Of course these modifications are not for everyone. First, not every person is eligible, and second, not every person wished to stay in their home for the period of time that may be needed.

Financially Unstable

The individuals who can no longer afford to make their payments every month may want to consider the mortgage home loan modification. The individual does not have to let the loan go into a state of delinquency with the Federal loan modification program. The payments only have to be late in most instances but even in with this requirement, there are some exceptions if the individual or family has proof that they will be late or not able to make future payments. This proof can come from the notice of a job loss or wage cut or similar events.

Technical Requirements

There are requirements that must be met concerning the loan itself such as the principle balance that remains as well as the type of residence that the mortgage is taken out on. The residence does have to be the primary living location of the family and has to be a single family home between one and four units. The amount permitted on the principle is according to how many units the home consists of. Other requirements include that the loan must have been taken out before January 1 of 2009 amongst others. With some of the requirements, there are exceptions depending on the situation.

Living Arrangements

One factor to consider when thinking about obtaining a loan modification is how long a family intends on staying in that residence. For those individuals who aren’t sure that they want to keep the home or have the responsibility of a mortgage may not want to opt for a modification but for a short sale instead. This means that their home is sold to another buyer and the borrower is free from the mortgage and can look for another, perhaps less expensive place to live.

Family Circumstances

Many of these items depend on the family circumstances. These should be well-thought through before going ahead with a mortgage home loan modification agreement. The negotiation process can take unnecessary time if the family decides against remaining in that home. It is recommended that the individuals involved seek professional advice concerning their situation and what would be best for them. They can find free advice online if and when they want to have a discussion with a fully qualified expert without any strings attached.

Steve

Mary Wise asked:




Having to file for bankruptcy is an unfortunate situation to have to be in. It is a difficult process and not a decision to be taken lightly. After filing for bankruptcy your credit report will reflect that making it harder to get any type of financing or credit loans. With a bankruptcy on your credit report you might feel hopeless in getting any kind of credit at all, let alone a mortgage. Many bankruptcy attorneys will recommend that you not even attempt to get a loan or credit for one to two years after filing for bankruptcy, but often after only six months many lenders will offer restricted credit accounts.

Mortgage Loans

Applying for a mortgage is a bigger process than just applying for a credit card. Most lenders are going to stick to the one to two year rule before even processing an application with a bankruptcy on it. If you are eager to buy another home after a bankruptcy it is important to really work on building your credit over the two years waiting period.

Cleaning up Your Credit

Before applying for a mortgage loan after bankruptcy really make sure that you make all your payments on time. Get copies of your credit report regularly to make sure that all information is being report correctly. Often credit reporting agencies will have false or old information. Keeping on top of your credit report and getting those issues corrected will help keep your credit score moving in the right direction making it easier to qualify for a mortgage when the time comes.

Down Payment

Due to the recently housing bubble burst and post-bankruptcy it will be harder to get 100% financing on a home purchase. Securing a mortgage loan after bankruptcy means that you will most definitely have to have a substantial down payment. Often you can get approved with a down payment of 3-5%, but a larger down payment is always better.

If you cannot come up with a down payment for your home purchase after bankruptcy there are agencies out there to help you. Check with your lender, real estate agent, or financial representative to see what options you might have for helping with a down payment. The rules of home buying have changed in the last few years, it is not as easy to get a mortgage and lenders are being much more diligent with whom they lend to, but that does not mean if you have a bankruptcy in your past it is impossible.

After Bankruptcy

After filing for bankruptcy it is easy to feel like you will never recover, but bankruptcy gives you the chance for a start over. Staying on top of your bills, making payments on time and really staying on track with savings will make it not only possible to secure a mortgage loan after bankruptcy, but easy.

Jessie