FHA

FHA Changing their Guidelines for 2010

by Wendy Black Polisi on January 27, 2010

FHA has announced that they will be tightening their lending guidelines in 2010.   The changes are designed to strengthen FHA reserves.  Due to the increase in foreclosures, FHA reserves have dipped down to just .53% of the value of insured loans.  Congressional legislation requires that they keep their reserves at least 2%.

Now, you might think that the foreclosures causing the changes were caused by the aggressive lending practices that once existed.  It is surprising to learn that 20% of all new mortgages (read: made after the real estate bust and mortgage market implosion) are actually in some stage of default.

Under the new guidelines, borrowers with scores less than 580 will be required to put at least 10% down.  The 3.5% required down payment will remain for borrowers with credit scores above this.  While it is a relieve to some that bad credit mortgages still exist, it will certainly be more difficult for many to get into a home.

Seller concessions will be reduced from a maximum of 6% to a maximum of 3%.  Another major change is that the required mortgage insurance premiums will be increased by 50 bps, going from 1.75% to 2.25%.  These two changes will cause a significant increase in the amount of cash that borrowers must bring to the table.

There is some debate as to how much the new guidelines will really impact the mortgage industry.  After all, in early 2009, most banks shifted their underwriting guidelines to not make loans to individuals with credit scores below a 620.  (Remember – the FHA insures loans that meet their guidelines but it does not underwrite them.  The individual lenders are the ones who underwrite the loans.)  This lead many individuals to seek fast credit repair so that they could close on contracts that they already had in place.

These changes are sure to have people everywhere running to a credit repair specialist!  Don’t be one of the masses!  Take control of your own financial future by enrolling in Credit Repair College! You can learn how to fix credit on your own and get a credit repair mortgage!

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How Do I Get a Mortgage After a Bankruptcy?

by Vincent Polisi on September 16, 2009

You would have to live under a rock to not understand that mortgage guidelines are getting tighter all the time.  This means that you want to qualify for a mortgage as soon as possible and once you do qualify you need to act quickly!

FHA loans are currently the best way to go for most everyone who does not have perfect credit.  Guidelines have already tightened up significantly!  There was a time not that long ago when FHA had no credit score requirement. Then, with the tightening in the lending environment,  they instituted a minimum credit score of 580 to qualify for an FHA loan.  In March of 2009, FHA changed the minimum credit score requirement again, this time taking it up to 620. Lenders now require a minimum score of 620, and some banks require an even higher score than 620 even though FHA will insure the loan with a 620.

Currently, you need to be 24 months out from your bankruptcy discharge if you filed Chapter 7, and 12 months from the discharge of a chapter 13.  You will also need to have at least 4 tradelines, so if everything was wiped out in your bankruptcy you will need to begin reestablishing credit as soon as possible.

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