If your credit is, well, iffy, you’ll want to take note of this. FHA is taking a hard look at lenders with higher default rates, and taking away their approval to underwrite FHA mortgages. Even if every loan they approve and fund conforms 100% to FHA’s underwriting guidelines. Why should you care? A couple of reasons. Continue reading ‘FHA Cracking Down on Lenders: Here’s Why You Should Care’
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Loading ...For those with no down payment, a low or moderate income, and borderline bad credit, USDA rural mortgages can be the fairy godmother. But, unlike FHA or VA, which just guarantee mortgages underwritten by private mortgage lenders, USDA, through its direct lending program, actually funds those loans. That means the agency can run out of money. Continue reading ‘USDA Is Running Out of Money for Rural Loans’
(1 votes, average: 4 out of 5) Loading ...It looks like FHA is planning to beef up its falling reserves by requiring borrowers to come up with a bigger down payment. Can you see your home ownership dream fading away? Well, don’t let it! Yes, FHA is likely to require 5% down instead of 3.5% in the near future. HUD Secretary Shaun Donovon says that’s a virtual certainty. But what about deserving sorts who really need some help? What if you know you could pay your mortgage but could never save a down payment while paying rent and other obligations? Is there hope for you? Continue reading ‘FHA Mortgages: Is My Down Payment Going to Increase?’
(1 votes, average: 5 out of 5) Loading ...It’s fairly common knowledge that bankruptcy can drop your credit score by hundreds of points and render you ineligible for a new mortgage for several years. You may have resigned yourself to renting for the foreseeable future. But you might not have to. Continue reading ‘Bankruptcy and Your Next Home Loan: Some Lenders May Cut You Some Slack’
(2 votes, average: 4.5 out of 5) Loading ...On January 1, 2010, would-be borrowers will get a rude awakening from FHA. The agency’s streamline refinance will no longer be the easy transaction it is today. Today, the biggest advantage of FHA streamline refinances is that they don’t require an appraisal or credit qualifying. So even if your home’s value has tanked and you have bad credit, you have been able to refinance easily into a better FHA loan. That opportunity is about to go away. Continue reading ‘FHA Toughening Guidelines in January: Better Refinance Now’
(5 votes, average: 4.8 out of 5) Loading ...You have your money together for a down payment. You’ve gotten preapproved by your lender. But if you have less than 20% for a down payment, you may not get your loan if you live in certain states. Because it’s not just Fannie Mae or Freddie Mac approving you for your mortgage. There will also be a mortgage insurance company involved. Continue reading ‘Are You On Restriction? It Depends on Where You Live’
(7 votes, average: 4.86 out of 5) Loading ...Government mortgage programs are all the rage these days–mainly because that’s where the money is. And unlike the crazy, water-tight underwriting of private mortgage programs, government mortgage lenders don’t require that you provide a saliva sample and turn over your first-born child. Continue reading ‘Government Loans Are Great–But You’ve Gotta Pass a CAIVRS Check’
(19 votes, average: 4.95 out of 5) Loading ...FHA mortgages are hot. Everyone wants them. Everyone wants to sell them. Right now FHA is the only home loan that hasn’t significantly tightened up guidelines. On the contrary, HUD has made these loans more accessible than ever as part of a refinance rescue effort designed to stop the foreclosure epidemic. And lenders, hurting for business on all fronts, are eager to join the party.
Not all mortgage lenders are approved to do FHA loans. But a disreputable loan officer (fortunately this isn’t often the case but it does happen) may tell you his / her company can do an FHA mortgage even if it’s not approved through HUD. He or she may take your application, then try to refer your loan elsewhere (for a fee!) or broker the loan through an approved lender–unbeknownst to you. This practice is icky and maybe illegal, depending on the circumstances. Unsuspecting borrowers have found themselves in nightmare transactions that never get done, either because the lender doesn’t do enough FHA loans to be good at them or because the lender has no control over a brokered or referred application.
Don’t start an FHA loan application unless you are sure of your lender. Why? Because once you start an FHA loan it’s hard to switch it to another lender. You can’t just shop around once your loan is in process and move your loan to whoever offers the best deal that day. This is because once you apply for an FHA loan, HUD assigns you an FHA case number. You only get one at a time, and if you want to move your loan, your first lender has to “release” the case number. And some of them (again this isn’t common but it does happen) don’t release case numbers easily.
This creates another reason to be sure your lender is really approved to do FHA loans before you apply–you don’t want someone who can’t close your loan to have your case number. While your loan application is being shopped around, rates could be going up, your application could be going completely sideways in the hands of newbies, and your dream home might be falling out of escrow.
So check your lender out upfront to avoid nightmares down the road. First, go to HUD’s web site to verify that your lender has approval to do FHA loans in your state. Just put in the lender’s name and HUD will tell you. Be sure to ask loan officers how long they have been doing FHA loans and how many they have closed–everyone is jumping on the bandwagon now, and you don’t want an FHA virgin handling your loan. FHA mortgages have their own rules and complications; get someone who does these extensively if you want yours to go without a hitch
(8 votes, average: 4.88 out of 5) Loading ...Countless renters became successful homeowners in the past because of two programs: FHA mortgages and down payment assistance like the Nehemiah program. The US Department of Housing and Urban Development (HUD) allowed FHA loans to be made with very small down payments (2-3%), charging borrowers insurance to cover their default risk. The program remained solvent for decades and has largely been considered a resounding success. Borrowers who couldn’t save even the tiny FHA minimum down payment could sometimes receive help through down payment assistance or community homebuyer programs, allowing them to buy a home with no down payment. And many more families became homeowners through these programs.Unfortunately, recent trends are showing that down payment assistance can have unintended results. For example, HUD discovered in a recent study that borrowers with no money of their own invested in a property are many times more likely to walk away from their homes and their mortgages than others with similar financial situations. And for the first time in its history, FHA’s insurance premiums collected from borrowers will not be enough to cover its losses from mortgage defaults–meaning perhaps a taxpayer bailout is in the future.
HUD would like to change its guidelines to prohibit down payment assistance and not allow FHA mortgages in which the buyer has not made a down payment using his / her own funds. So what does that mean to those considering a home purchase today? Urgency. If you are considering a home purchase and think you might qualify for down payment assistance you may have very little time to close that deal. So STOP reading this blog and START your online search for a lender NOW. You can thank me later when you have time.
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Gina Pogol writes for an online media company about mortgage and finance. In addition to a decade in mortgage lending, she formerly consulted for Experian and other credit bureaus, and worked as a tax accountant for Deloitte. She has a BS in Financial Management from the University of Nevada.
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