FHA-Loans-Information

If you are a first time homebuyer you may not have been able to establish very many credit lines.  The traditional credit lines are such as student loans, credit card bills, car loans, and type of loan that are picked up by the credit agencies.  This makes it very difficult to get a home mortgage loan because you don’t have a traditional "credit history".  A mortgage company can’t tell you if have a history of paying off your loans.

If this sounds like you, there is some good news!  It is called FHA Housing Loans.  The FHA Loan Qualifications will look at other credit lines to determine you credit history.  They will look at bills you pay such as utilities bills, phone bills, cable TV bills, day care center bills, rental bills, and other recurring bills.  Most people have at least some of these types of bills.

The author of this article goes into more detail of FHA Loan Qualifications.

FHA Loan Qualifications – How to Prepare to Meet FHA Loan Qualifications

Only because you do not possess student loan, credit card bills, car disbursement and other conventional trade lines trailed by the credit agencies does not necessarily mean you cannot be eligible for a credit loan.

Most of the times borrowers searching for a mortgage do not have enough conventional credit history to give a lender with a rational credit rating. This is never a big deal!

The great news is that the FHA loan qualifications accept non-conventional credit in situations where you have inadequate trade lines with Equifax, Trans Union and Experian.

How does it work?

Nor-Conventional Credit References

FHA requires that as a borrower, you should have three credit references from two groups of non-conventional credit resources.

Group One- this first group of references is heavily weighted than the last group it is deemed to be a more precise forecaster of your credit value.

The first group comprises utility payments like electric, water and gas. Rental payments, cable TV bills and telephone can also be included in the first group.

Group Two- The qualifications for FHA are feasible by incorporating payment references like payment to day care, insurance payments, internet phones, and a 12-month bank statement that shows the history of deposits thus illustrating an increased balance. The last group also allows individual loan wherein the settlement terms are documented and signed by both concerned parties.

Applying for the FHA financing

In order to become eligible for the FHA financing, you should show that you are employed, have a good job status and that you are reliable. As you apply you have to give the following:

1.You must present your previous addresses within two years. If you are a couple that had varied addresses, you have to incorporate both of your addresses.

2.You must able to show your employment history in two years, that includes the name of your employer and their addresses along with your monthly gross income.

3.Present your income tax form and W2 for the last two years.

 4.If you are a veteran, you will have to incorporate your discharge papers as evidence of you status as a veteran.

The ideal way to qualify for the financing program of the FHA is to illustrate that you have been a dependable credit holder within two years.

In order to do such, you have to settle your old debts, pay on time, avoid any major credit procurement like buying a new car and stay with one employer. Keep in mind that being eligible for FHA financing is a lot simpler that dealing with private lender but it’s not for free. You have to show stable employment, dependability and overall ability to pay on time.

Author: Brian I Park For more information on FHA Loan GuidelinesVisit ‘New FHA Loan Requirements’ at http://www.newfhaloanrequirements.com

Article Source: http://EzineArticles.com/?expert=Brian_I_Park

Comments:  Even if you don’t have the traditional credit history there is hope you can purchase a new home with a FHA Housing Loan.  If you want more tips on how to get a FHA Housing Loans please read this article "FHA Housing Loans – Tips For Getting A FHA Housing Loan!"

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Types Of FHA Housing Loans fha financing, fha housing loan, fha housing loans, FHA loan qualifications

If you don’t have a large down payment of 20% to secure a conventional home loan than a FHA Housing Loan may be just what you are looking for.  A FHA Housing Loan only requires 3.5% down payment.

Another good point of FHA Housing Loans is you don’t need a high FICO credit score.  Because FHA insures the FHA Housing Loan, lenders are more willing to lend to homebuyers with less than stellar credit.

The author of this article will give you a brief overview and tips on securing a FHA Housing Loan.

Tips For Obtaining FHA Financing For a Home Loan

FHA financing is a great option for buyers that do not have at least 10% as a down payment and/or do not have FICO scores of at least 720. And, there are some important things to know about FHA financing so that when a FHA buyer goes through the process, the stress and frustration is at a minimum, since the buyer is already prepared for the FHA process.

First of all, the main qualifying factors for a FHA loan is that the LTV (loan to value) can not be more than 96.5% of the purchase price, meaning that the buyer needs a minimum of 3.5% as a down payment. That down payment can be the buyer’s own money or be gift funds (funds that are given by friends, family members, employers, etc that do not have to be paid back). Under FHA guidelines, the seller can pay up to 6% of the buyers closing costs, but none of this money can go towards the buyer’s down payment.

There is also an Up-Front Mortgage Insurance Premium (UPMIP) of 1.75% of the loan amount. This fee can be added to the loan amount. And, there is also Monthly Mortgage Insurance (MMI) of 0.55% of the loan divided by 12. Once you obtain 20% equity in the home, you can get rid of the MMI.

So, as you will see, FHA loans are not cheap loans to obtain, but when a buyer does not have at least 10% as a down payment and/or FICO scores of less than 720, it is a great option to get a buyer’s foot in the door to home ownership and the benefits definitely outweigh the negatives on a number of levels.

What is REALLY important to know when going through the FHA process and obtaining FHA financing is that this type of loan is absolutely a full document loan, meaning, the lender wants to see anything and everything about the buyer’s financial history, credit, bank information, tax history, income, debt, and anything else they can know about the buyer.

The buyer needs to give the lender A LOT of documentation and information and this gathering of information can sometimes obtained by the lender throughout the entire transaction, depending on how complete the file was in the first place, when the package was delivered to the FHA underwriter for the initial preapproval.

The underwriters pick apart the information with a fine tooth comb and the information has to be extremely accurate and complete, or the underwriter will ask for additional supporting documentation. It can consist of explanation letters, more documented information, etc. For example, if the buyer had a nick name that is on some information, the buyer will have to explain it. If there is a lapse in employment, alimony, child support, etc, the buyer will have to explain it. If there is a ding on the credit, the buyer will have to explain it.

As a buyer for a FHA loan, you can basically be prepared to explain every detail of your life for the last 2 years. If you want the process to go smooth and faster, the best thing you can possibly do is to get with the lender and give as complete of a package as possible upfront. So, if you have a name change, issue with credit, etc, explain it in a letter upfront. Do not try to hide anything or leave anything out of this package, or else it WILL come back to haunt you and the underwriter WILL catch it and then the process will be delayed.

And, when you are in contract to buy a home, and the package is not fully complete, and the underwriter is asking for all kinds of information that you must gather, it can be very stressful, since now that you are in contract, there are deadlines to meet with the contractual obligations to the seller and deadlines to close the deal on time. Being thorough upfront is the key to success. And, choosing a good lender who is thorough and can help you through the process and gather all the information and screen it well BEFORE it goes to the underwriter is really key to a smooth transaction.

Also, FHA is very swamped with loans right now, so it is a good idea to ask for a 45 day closing for any transaction that is dealing with FHA. 30 days escrows are possible, but it is pushing the envelope and can be stressful to close in that amount of time. Also, asking for a long loan contingency period also takes off some pressure. I am working with a lot of buyers that are obtaining FHA financing and these are the types of things I am running into with these transactions. And, to avoid stress and frustration once a buyer actually finds a home, having the initial preapproval package as complete as possible, will really help a lot. And, making sure to choose a thorough lender definitely helps to make the process smoother.

And, of course, to really make the process run efficiently, the buyer would call me as their Santa Clara and Alameda County realtor who will stay on top of the process throughout the whole transaction and make sure everyone is doing what they need to do to get the deal closed, as well as stay in communication with the buyer consistently so that the buyer always knows exactly what is going on throughout the transaction.

Author: Karen List I have been a full time real estate agent for 14 years and selling homes is my passion because I truly feel that owning a home is invaluable. Check out my website at http://www.karenlist.com for a lot more information and my bio/resume.

Article Source: http://EzineArticles.com/?expert=Karen_List

Do You Want More Information On FHA Housing Loans?

Comments:  As you can see a FHA Housing Loan can be a great option for financing a home purchase if you don’t have a large down payment and you have low credit scores.

You can find another good article on FHA Loans Information here.

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Types Of FHA Housing Loans fha financing, fha housing loans, fha loan, fha loans, fha loans inflormation

Comment:  The author gives you FHA Loan Info that compares FHA Loan Financing against conventional loan financing.  He lists five things you should know before you decide which one you should use.  This article will give you a lot of FHA Loan Info.

Conventional Vs. FHA Financing: 5 Things You Should Know

Is FHA Financing a good choice? Yes or else it would not have been used by 30 million people. Is Conventional Financing bad? No. It is just a matter of which service suits your requirements the best.

Good, Better, Best

FHA loans are offered by thousands of lenders and are readily available nationwide and because they all offer identical terms and services, it is worth your while to shop around to get the best possible rates when you either finance for the first time or refinance.

Simple and Basic

FHA Financing is a basic mortgage program implemented by the Federal Government in the1930s with the objective of offering affordable mortgage loan to people who either have had credit problems in the past, are first time home buyers, or have low or moderate incomes.

It has expanded in popularity and is today a choice worth considering by any borrower. FHA Financing has no hidden fees or high increases that may result in foreclosure down the road. The borrower gets both financial security and peace of mind.

Rates, Deposits and Payments

FHA rates are lower than Conventional rates and you are not subjected to pre-payment fees. You can get fixed-rates with FHA which has a big impact on your monthly re-payments and because your monthly repayments are set, you can budget long term. You do not need exorbitant deposits, 3% of the loan amount will do it.

Other financial institutions insist borrowers prove cash reserves when they close the deal and this means that beside the deposit you get heaps of money in savings, something not attainable by the majority. FHA does not ask for reserves.

On top of this, FHA allows owners to provide anything up to a 6% cap of the sale price. This can be in the form of what is called ’seller contributions.’ In the event of a market being slow, or where sellers use their rights to move homes, seller contribution credits secured by the owners, can be put toward paying the buyers closing costs.

Except for the deposit, this may even cover all of the buyer’s closing costs. A word of caution though, contributions by the seller must be attained in writing and must be part of the purchase agreement which is inspected by the provider of the loan. Borrowers must provide sufficient proof of income to demonstrate the ability to pay the mortgage.

Requirements of a conventional loan applicant include excellent credit, job stability with sufficient income, a sizable down payment, and low debt to income ratios. Borrowers who meet Fannie Mae guidelines are rewarded with an interest rate only slightly lower than an FHA interest rate.

Credit Issues

Credit issues affect many people and if you have ever been faced with bankruptcy or foreclosure then the FHA option is your best bet when looking for a mortgage. FHA is more relaxed and lenient toward your application.

The criterion is that if you have been subject to bankruptcy, it must have been a year previously to the load application under Chapter 13 Bankruptcy or two years under Chapter 7 Bankruptcy. Conventional Finance institutions may not even look at you under these circumstances.

Leniency and Understanding

FHA qualifying criteria are that you have permanent employment and can prove you are able to cover your monthly repayments. They also require you produce some sort of credit history, and if you do not have what is called traditional credit, you can use items like utility payments, past rental records, insurance policies or any other report from approved credit providers.

FHA has unusually liberal standards for qualifying and may allow you to borrow a lot more than conventional loan companies. With FHA programs, as much as 43% of your monthly income can be allocated to recurring monthly costs like mortgage payments and vehicles payments.

If you quality, FHA can provide you with 100% of the loan. As the borrower, you are liable for the initial insurance premiums which comes to about 1.5% of the loan amount, but this amount can be absorbed into the loan if need be. Your repayments will be 0.5% of the total loan amount divided into 12 months, and a 3% deposit is required, however no reservations are needed and it can take the form of a gift, but cannot be absorbed in the loan amount. Closing costs are your liability, but can also be funded in the loan amount.

Conventional institutions stipulate the borrower have 5% for the deposit as well as 2 months reserves in the bank and will not fund closing costs in the loan amount.

Citizenship

You do not have to be a citizen to quality for an FHA loan. You can be either a permanent or a non-permanent resident. If you are a permanent resident, you need to prove this via documentation supplied by the Bureau of Citizenship and Immigration Services (BCIS) who are part of Homeland Security.

In the case of non-residency, you need to prove that you can legally work in the country and to do this you will need to produce your Employment Authorization Document issued by the BCIS.

By: mikecole1Article Directory: http://www.articledashboard.com

Mike Cole is a freelance writer who writes about economic issues and financial products pertaining to the mortgage industry such a fixed rate mortgage as well as thelowest mortgage rates.

Comment:  Here is some updated FHA Loan Info.  The author said the down payment for FHA Loan Financing is 3% of the loan amount, it has been changed as of January 1, 2009 to 3.5%.  Also, seller down payment assistance has been eliminated. 

As you can tell, you need to get more FHA Loan Info from your lender because FHA Loan Financing may be the way for you to finance you new home.

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