December 14, 2017

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Articles in Category: Credit Issues

Getting Ready For An FHA Home Loan In 2018

Getting Ready For An FHA Home Loan In 2018

Are you getting ready for an FHA home loan in 2018? There are some checklist items you should be thinking about in the planning stages of your FHA loan. Credit Monitoring 2017 was a very bad year for many companies because of hacker activity. Many high-profile brands, corporations, even credit reporting agencies themselves were the victims of security breaches. Do you know if your accounts have been affected? If you don’t, you may not be as ready for a home loan as you think you are. For some, it may be best to have regular credit monitoring in the months leading up to your credit application to avoid surprises. Know the contents of your credit report, dispute inaccurate data, and keep an eye on new activity. You’ll be glad you | more...

 
FHA Loan Rules For Income Verification: Part-Time Employment Income

FHA Loan Rules For Income Verification: Part-Time Employment Income

Is it possible to be approved for an FHA home loan using part-time employment income? There are indeed FHA loan rules for this type of income and instructions to the lender for how it is to be reviewed. HUD 4000.1, the FHA home loan handbook, states that all verifiable income must meet certain FHA minimum requirements including the ability to verify two years of employment (not necessarily with the same employer). One area some borrowers may be concerned with in this area is part-time income. Does the FHA allow a lender to verify and count as income the earnings from a part-time job? The rules for this are found on page 200 of HUD 4000.1, which begins by defining what the FHA considers part-time income: “Part-Time Employment refers to employment | more...

 
FHA Loan Questions: Credit, Bank Statements, and Overdrafts

FHA Loan Questions: Credit, Bank Statements, and Overdrafts

Here is a variation on a common question about FHA home loan requirements: “How many months of bank statements are required to show the underwriters in relevance to the month we are closing on the house? Also if there are NSF/overdrafts on our account three to six months prior to our closing month, will that hurt our chances of getting the loan?” To answer these questions properly we need to do some detective work in the FHA loan rule book. Let’s start with the age of the documents needed for a home loan. The rules that govern FHA home loans says all documents must be, in general, no older than 120 days. The lender’s standards may apply in such cases-will the lender require more bank statements in order to review | more...

 
FHA Loans And Charge-Off Accounts

FHA Loans And Charge-Off Accounts

Do you ever wonder about applying for an FHA Loan while having charge-off accounts in your credit history? Is it possible to get approved for an FHA home loan even though you have some negative credit information in your background? This is a question many ask, and the answer can be complicated depending on how old that negative credit data is, and whether or not it indicates an overall pattern of credit behavior. When you fill out an FHA loan application, your loan officer will need to examine your credit history, FICO scores, and other areas to determine your credit worthiness. Some borrowers come to the loan process with outstanding credit, others may have old issues or even currently disputed items on their credit reports that make them worry about | more...

 
FHA Home Loan Rules For Salary, Hourly, Part-Time Income

FHA Home Loan Rules For Salary, Hourly, Part-Time Income

Not every home loan applicant has the same type of employment, compensation, or schedule of compensation. That’s why FHA home loan rules in HUD 4000.1, the FHA single family home loan handbook, include different instructions to the lender for a diverse range of income sources. FHA Loan Rules For “Primary Income” HUD 4000.1 has sections for hourly income, salary, and part-time income. The section that includes these guidelines states that the lender is responsible for examining earnings from the home loan applicant’s “primary employment” and defines it as follows: “Primary Employment is the Borrowers principal employment, unless the income falls within a specific category identified below. Primary employment is generally full-time employment and may be either salaried or hourly.” “Current Pay” Versus “Projected Pay” According to HUD 4000.1, FHA loan | more...

 
FHA Loan Rules For Loan Approval: Federal Debts and Tax Liens

FHA Loan Rules For Loan Approval: Federal Debts and Tax Liens

FHA loan rules for loan approval include instructions to the lender about unpaid federal debts and tax liens. Your chosen participating FHA lender is responsible for verifying your income, employment record, and your monthly financial obligations-which may include tax obligations such as a lien, or a federal debt. Unresolved taxes and federal debt can be a serious issue that will affect a home loan application. The status of such debt is one of the most important factors. According to HUD 4000.1, “Mortgagees are prohibited from processing an application for an FHA-insured Mortgage for Borrowers with delinquent federal non-tax debt, including deficiency Judgments and other debt associated with past FHA-insured Mortgages.” The FHA loan rules in this section also add that the lender is required to determine “whether the Borrower(s) have | more...

 
FHA Loan Waiting Times After Chapter 13 Bankruptcy

FHA Loan Waiting Times After Chapter 13 Bankruptcy

We are often asked about FHA loan rules governing home loans for those with a bankruptcy on their credit reports. These types of questions vary, but often feature a common theme: “I had a bankruptcy discharged in July 2014. How long do I have to wait to purchase another home with 10% down payment with a credit score of 590?” After a bankruptcy is discharged, rebuilding good credit is one of the most crucial issues related to this question. A borrower must work hard, post-bankruptcy, to establish the best credit possible in order to qualify for a new home loan. You may find that participating FHA lenders are willing to work with borrowers with credit scores starting at around 620 or higher. That FICO score of 620 is not listed | more...

 
FHA Loans And Charge-Off Accounts

Do The Same FHA Loan Requirements Apply To All Borrowers? Part Two

Do the same FHA loan requirements apply to all borrowers? We have been examining that question in recent posts. FHA home loan rules were written to accommodate a variety of circumstances. There’s no true “one size fits all” home loan, so there are different regulations for different situations. The basic standards apply to all, but there are situational factors where some rules apply to certain borrowers that won’t apply to others. But what does this mean? FHA FICO Score Requirements Borrowers with qualifying FICO scores are eligible for maximum financing, which would include a minimum 3.5% down payment based on the adjusted value of the property. But the rules change for those who do not have FICO scores that meet the minimum requirement. Those with FICO scores below 580 will | more...

 
FHA Refinance Loan Options

Do First Time Home Buyers Have Different FHA Loan Requirements? Part Two

Do first time home buyers have different FHA loan requirements than those who have owned a home before? The short answer is no-FHA mortgages do not have different terms or requirements for different types of borrowers. First time home buyers may find that an individual lender or financial institution offers incentives for first time buyers, but these programs are not mandated or regulated by the FHA. The FHA loan FICO score minimum requirements, appraisal rules, regulations governing verification of down payment funds and other requirements are identical no matter who is applying. That is not to say that FICO scores and other financial qualifications don’t change how an FHA mortgage loan is handled-in that area borrowers will find different requirements depending on whether the borrower is deemed a good credit | more...

 
FHA Home Loan Rules For Salary, Hourly, Part-Time Income

How Important Is My Credit Score For An FHA Home Loan?

How important is my credit score for an FHA home loan? It’s a question many ask, and it’s important to ask as early in the planning stages of your new home loan as possible. What do you need to know about credit scores and home loan approval? Credit Score Requirements Vary Depending On The Lender You will find that some lenders require certain credit score ranges while others have different standards. That’s a given-no two lenders are exactly the same. But did you know that even within a single financial institution there may be varying credit score requirements depending on the type of loan you seek? For example, FHA One-Time Close construction loans may require a different minimum credit score than an existing construction home loan. There are several reasons | more...