FHA Underwriting Guidelines
This web site will help you understand FHA mortgage underwriting guidelines and
it will also help you determine if an fha mortgage loan is right for your situation.
FHA loans have always been a good opportunity for home buyers, but there are some
things you should consider before you decide.
First, we need to understand what an fha mortgage is and is not. The Federal
Housing Administration (FHA) does not lend money, plan, or build
housing. It is a division of the Department of Housing and Urban
Development. The Federal Housing Administration sets standards for
underwriting and construction, but its main purpose is to insure
residential mortgage loans made by individual/private lenders. The
basic intent was to provide FHA-insured loans to borrowers for their
primary residence. FHA loans have always been a great alternative for
people who don't quite qualify for Conventional financing. The
guidelines are more forgiving allowing for smaller down payments, higher
debt to income ratios, some credit issues, and more sources for the
down payment. The great thing is that the interest rate is only
slightly higher than a conventional loan. Sometimes the interest rate
is actually lower. Remember this! IF
you go to a Mortgage Broker or a Bank and the rate quoted is exceptionally
higher, they are charging you too much. Call around for
quotes. You will usually get a better rate from a broker. Advantages:
- FHA is not as strict on credit scoring.
- High debt to income ratios: 31% / 43%
- 100% of down payment can be a gift from: relative, close friend, or
employer.
- Seller, builder, or realtor can pay up to 6% of the sales price
towards the buyers closing costs, discount points, prepaids, and
up front
mortgage insurance premium.
- Buyer can finance closing costs into the loan, except for prepaids
and discount points.
- Credit criteria is not as strict as a Conventional loan. In fact, you might qualify
if you have filed a chapter 13 bankruptcy and have been in it for at
least one year.
Disadvantages:
- FHA mortgage insurance may be more expensive than Conventional mortgage
insurance.
- Maximum loan amounts are lower than conventional loans and they are
determined by area.
This web site has a ton of information that will help you better
understand FHA loans. The guidelines are very complicated in some
areas so I could never include them all on this site. If there is
information you think should be added to this web site please send us an email
or If there is
an area you have a question about just send me an email and I'll do my
best to answer it for you.
If you are interested in the guidelines for Conventional loans you
should visit my other web site about mortgage
underwriting guidelines. That site talks about all types of loan
products and it has several mortgage
calculators if you want to play around with the numbers. MortgageUnderwriters.com also covers Credit
Repair and the Loan
Process.
If you live in the state of Georgia I highly recommend Peach
State Mortgage for any of your mortgage needs. Call them on the
phone for a free prequalification. They also have a free for sale by
owner program.
FHA Secure Refinance:
The FHA Secure program can help home owners who are behind on their home mortgage and
facing foreclosure. This program allows the delinquent home owners to refinance their
ARMS (adjustable rate mortgages).
A home owner with a late mortgage payment would normally not qualify for an FHA mortgage refinance but
under the new FHA Secure, home owners would be eligible for an FHA refinance if they can prove the late mortgage payments were directly caused by an adjusting mortgage rate,
one that has increased from the standard introductory rate.
Standard FHA underwriting guidelines will apply to the FHA Secure program and a new FHA approved appraisal will be ordered for the property.
Borrowers will be eligible to refinance up to 97.75% of the appraised value of their home.
Using the FHA Secure program with standard FHA underwriting guidelines FHA will be able to
help troubled home owners.
This program will not help home owners who have properties that have depreciated in value and are now worth less then the current mortgage
balance.
| 