Kentucky Mortgage Broker Offering FHA, VA, USDA, Conventional, and KHC Down Payment Assistance Home Loans FHA Guidelines

FHA Removes Credit Rule

FHA Removes Credit Rule.

 

FHA Removes Credit Rule

In March of 2012, the Federal Housing Administration drafted a rule to help lower its risks to its emergency fund, which was to require borrowers to pay all collection accounts over $1,000.00 or have documented payment arrangements with them before a mortgage loan was approved. The rule went into effect April 1, 2012 but was delayed a week later to be revisited in July 2012 after industry comments were considered.

A combination of the inclining insurance premiums meant to support the FHA emergency fund that was close to needing a bailout and the new rule caused speculation that more business would be pushed to the GSE giants Fannie and Freddie. Industry experts did not support the new credit rule, especially lenders heavily reliant on first time homebuyer business and homebuilders.  According to the vice president of John Burns Real Estate Consulting, Lisa Marquis Jackson, 25% of builders they surveyed the week FHA announced the new rule anticipated loosing or delays in up to 60% of their sales.  The vice president of the firm went on to comment that the effect of the dispute rule would have a “notable impact on the housing market.”

Edward Mills, senior vice president of FBR Capital Markets commented about the difficulty in making choices to protect the insurance fund while still keeping mortgage credit available.

In a letter sent Friday by the FHA, the credit rule is revoked, though an FHA spokesperson advised they are still taking comments about the original proposal and will be issuing a new guidance very soon.

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Louisville KY FHA Loans

 

 

The Federal Housing Administration (FHA) is a federal agency within the U.S. Department of Housing and Urban Development (HUD). FHA’s primary objective is to assist in providing housing opportunities for lo to moderate income families. FHA has both single family (1-4 unit homes) and multi-family (5 or more units) mortgage lending programs. The agency does not generally provide funds for the mortgages, but rather insures home mortgage loans made by private industry lenders such as mortgage bankers, savings and loans and banks.

Is there a Loan Limit on Louisville Ky FHA Loans?


FHA Maximum Loan Amounts are set by HUD for every county in the United States. Maximum loan amounts vary from one county to another. It is critical that the borrower’s loan amount, including financed closing costs, not exceed the maximum set by FHA for the county in which the subject property is located. There are no income limits on Louisville Ky FHA Loans  . Check with you Loan Consultant for the maximum Mortgage amount allowed in the county you are considering purchasing a home in.

Is Mortgage Insurance Required On Louisville Ky FHA Loans?


FHA is a government insured program with a unique mortgage insurance program. Although not as expensive monthly, you have an up front MIP fee. FHA requires a mortgage insurance premium on the 203(b) program. An up front premium of  1.0% of the loan amount is paid at closing and can be financed into the mortgage amount. In addition there is a monthly MIP amount included in the PITI of 1.15% . Condos do not require up front MIP, only monthly MIP.

Can I Use Gift Funds for the Down Payment for a Louisville KY FHA Loans ?

 

One of the most popular aspect of FHA financing is the ability to receive your down payment as a gift. It just needs to be from a relative. The down payment can be 100% gift funds. This is one of the key benefits to the Louisville Ky FHA Loans and FHA program. Most conventional mortgages do not allow 100% gift funds. Generally the borrower must have 5% of the funds.

Verification of the source of gift money is not required. However, it is necessary that the gift funds be deposited in the borrower’s bank account, or in an escrow account, prior to underwriting approval. Proof of deposit is required.

Gift donors are restricted primarily to a relative of the borrower. They can also be certain organizations, such as a labor union or charitable organization. Contact your Loan Consultant for complete information.

 

What are the Rules Regarding Bankruptcy for a Louisville KY FHA Loans?


FHA may have the most lenient policies towards bankruptcy, but you still must have a valid reason and re-established credit. Generally, a bankruptcy will not necessarily disqualify a potential borrower. Guidelines are as follows:

Chapter 7: Two years must have passed since the bankruptcy was discharged. (Note: Discharge, not Filing Date) The borrower must have re-established good credit without delinquencies for two years (or has chosen not to incur new credit obligations), and has demonstrated an ability to manage financial affairs. If the borrower does not incur new credit, such thing as, Car Insurance, Telephone, Cable, Utilities, Medical Payments, Etc. will be used to demonstrate re-established credit.

Chapter 13: A borrower currently paying off debts through this process may qualify if a minimum of one year of the pay out period had elapsed and payment performance has been satisfactory with no new derogatory credit and the borrower must receive court approval to enter into the mortgage transaction.

 

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