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Saturday, March 30, 2013

Life after foreclosure

By Marilyn Kennedy Melia • Bankrate.com

These days, record-breaking foreclosure statistics are coming out with numbing frequency. But what happens to the thousands of families after their personal financial disaster is added to the mounting national count?

Unfortunately, once a foreclosure is final, the financial and emotional upheaval is far from over.
While there’s considerable pain, most foreclosure victims will eventually become homeowners again, says Jay Zagorsky, a research scientist at Ohio State University.

Still, that won’t happen anytime soon, especially since mortgage rule maker Fannie Mae has recently lengthened the time that must lapse between a foreclosure and approval for a new mortgage.

Here’s a look at the issues foreclosed families grapple with, and some smart solutions.

Finding a new home
Suffering the credit fallout
Buying another home
Owing an employer an explanation
Getting hit with a tax bill
Living through loss

Finding a new home

The immediate problem is obvious: where and how to find a new place to live.
Lack of cash for a rental deposit is probably the biggest barrier to foreclosed owners getting re-established on their own. Landlords will sometimes accept tenants who have a credit score of just 580, says Maurice Ortiz, marketing director at The Apartment People in Chicago.

But if landlords look beyond a numerical score to credit records, a foreclosure may spook them, since it indicates the potential tenant hasn’t paid his housing bills, adds Ortiz. If the foreclosure can be explained, however, and if the rental candidate has a solid job history, he may be accepted.
Moreover, “if you’re on the edge, you may have to double your deposit,” says Mark Fogelman, president of Memphis-based Fogelman Management Group.

Scraping together a rental deposit isn’t easy for cash-strapped foreclosed owners.
“That’s why I recommend that people try to make plans as soon as they think foreclosure (is inevitable),” says Patricia Lynch, a corporate trainer with ClearPoint Financial Solutions in Richmond, Va. Anyone who has a FHA-insured loan who’s being foreclosed on should investigate the “cash for keys” program, whereby they get a check for up to $1,000 if they voluntarily vacate and leave their home “broom clean,” says Lynch.

Suffering through the credit fallout

Once owners default on their mortgage, other creditors consider it much more likely they won’t collect what they’re owed either.

“Credit cards have a ‘default’ rate, and (foreclosed owners) could see their interest rate jump to very high levels — as much as 30 percent,” says John Ulzheimer, president of consumer education for credit.com. “You’ll also have a hard time getting a decent car loan,” he adds.

If a foreclosure is an isolated event on an otherwise good credit record, consumers may be able to rehabilitate their record and garner better loans and card rates in 24 months, says Ulzheimer.
But since a foreclosure is rarely the former owner’s only credit slip-up, and foreclosures are often combined with the fallout of punishing rates, some former homeowners will never climb back up to a good credit score, Ulzheimer says.

Buying another home of one’s own

Fannie Mae has just upped the length of time it takes from the completion of a foreclosure sale until the borrower can get a new mortgage from four years to five years.

The extra year is designed to deter what Fannie Mae believes are borrowers who have made reckless debt decisions. But foreclosed owners who can explain that extenuating circumstances — typically situations beyond someone’s control, like a job loss — are the impetus for the foreclosure must wait only three years.

Perhaps the best option for obtaining a mortgage after foreclosure is with a federally insured FHA loan, says Jerry DuPaw Jr., a McHenry, Ill., mortgage loan officer.

The minimum time between the completion of foreclosure until when you can be approved for an FHA loan is three years — whether or not there are extenuating circumstances. Still, FHA borrowers will have to show that they’ve been practicing good bill-paying habits since the foreclosure.

Owing a potential employer an explanation

Should you lose your job as well as your home, your new job hunt shouldn’t be hindered by the subject of your foreclosure coming up in job interviews — unless you’re applying for a job in which you handle money.

“We recommend that employers do credit checks when they are concerned about how financially responsible someone is — which may be for any money-related position from a cashier to an accountant,” says Robin Throckmorton, a Loveland, Ohio, human resources consultant.

The federal Fair Credit Reporting Act has rules employers must follow, such as notifying the applicant of the credit check, and most companies limit checks so as not to run afoul of the law.
If a foreclosed owner is applying for a financial job, he or she should have an explanation ready, perhaps describing how the foreclosure has changed some of his or her personal money-management skills today, suggests Throckmorton.

Getting hit with a tax bill

It seems like the ultimate injustice: You lose your home and then weeks or months later you open the mail and find a bill for taxes on the amount of mortgage that the lender was never able to recover from the sale of the property.

Anytime debt is forgiven, it’s a potentially taxable event. You are not paying back money that you borrowed, so that money is considered income by the IRS.

However, there are some exceptions. Last year, Congress passed relief for foreclosed owners — but only those who lost their principal residence and didn’t have a mortgage that they had previously taken as a cash-out refinance, using the proceeds for expenses other than improving their home, says Julian Block, a tax attorney and syndicated tax columnist in New York City.

But foreclosure victims may still not have to pay a tax tab, even if they had a cash-out refinance. That’s because the IRS has long allowed taxpayers to escape a bill on forgiven debt if they are insolvent. If, for instance, you receive a Form 1099c from a lender saying it couldn’t recover $5,000 of what it was owed, but your debts exceed your assets to the tune of $15,000, you must file Form 982 with your tax return to clear your tax obligation.

Living through loss

The emotional toll of leaving a home and neighborhood are impossible to quantify. One recent report released by First Focus, a Washington, D.C., advocacy group, finds that some two million children are likely to be impacted by foreclosure in some way, including the disruption of being placed in a new school after a move.

One glimmer of hope is that the large numbers of foreclosures today may lessen the stigma of the event, says consultant Throckmorton. She remembers when job applicants had to explain frequent changes in employment, because jumping from job to job was frowned upon. “Now that’s considered normal — with foreclosures so much in the news, it may prompt people not to make judgments.”

My name is Scott Grebner and I have been helping my clients realize their own personal real estate dreams. Real estate is a relationship-based business that works best when client relationships are built on trust and confidence. My goal is having clients be completely satisfied with the professional and caring service they have received.

The role of technology is rapidly changing how the real-estate market functions in this country today. Gerharter Realtors is embracing these new mediums of communication to better serve our customers. We have created our e-family to better place important information in your hands to help you with your housing needs. As a part of Gerharter Enterprises we have access to a broader range of additional services and resources to better assist you. Visit me at my Web Site, Blog, Facebook, Twitter, You Tube or Pinterest. Please check out our helpful resources on Sellers Tips, Buyers Tips, Foreclosure Tips, and Mortgage Tips. For a personal consultation please visit our Office.

It seems that the dream of past generations was to pay off a mortgage. The dream of today’s young families is to get one. I would love to hear from you, about your Real Estate Dreams and questions.

Email me at scott@gerharterrealtors.com.

Mortgage After Foreclosure, Bankruptcy and Short Sales

by Jason

Mortgages and home ownership are significant issues for my debt clients that are facing foreclosure, bankruptcy or considering a short sale for their home. When one of these events happen, there are general rules of thumb of what will happen if you seek a mortgage and when you might be able to qualify for a mortgage.

Foreclosureresults in the longest waiting period before you can qualify for a mortgage. For this reason, when things appear dire, a short sale or bankruptcy should be a strong consideration before you allow your house to simply go to foreclosure. On average, it will be 7 years before you can qualify for a Fannie Mae or Freddie Mac mortgage after completion of the foreclosure. FHA and USDA Rural will require at least 3 years from the date of completion of the foreclosure and VA will require 2 years. No matter how you look at it, this is a long time and by avoiding a foreclosure with a bankruptcy, as you will see, you can cut this time in half.

With a Short Sale, the time before you can qualify for a mortgage sale is 2-4 years depending on the loan to value ratio of the short sale agreement and depending on the conditions of the sale. The mortgage company will still look at the sale date (the day the short sale closes) when considering your qualification for a mortgage and the time period you have to wait. This range is the same for Fannie Mae, FHA and USDA Rural and Freddie Mac is a straight 4 year time period.

Bankruptcy on the other hand, carries with hit the same 2-4 year time period of a short sale which is significantly less than what happens with a foreclosure. Fannie Mae and Freddie Mac require waiting 4 years from the date of discharge, FHA and VA is 2 years from the discharge date and USDA Rural is 3 years from the discharge date.

Incidentally, with a Chapter 13 Bankruptcy, the time period may be reduced to one year with satisfactory plan payments and special permission from the Bankruptcy Court when considering a FHA, VA or USDA Rural mortgage.

When is becomes apparent that things are beginning to go downhill financially and that a foreclosure may be imminent, it is best to consider going ahead with a bankruptcy or short sale to shorten the time period you have to wait if home ownership is a renewed goal after you obtain financial freedom. Allowing a foreclosure will all but guarantee that a mortgage and home ownership is years away and avoiding the foreclosure will go a long way in allowing you to return to home ownership sooner.

My name is Scott Grebner and I have been helping my clients realize their own personal real estate dreams. Real estate is a relationship-based business that works best when client relationships are built on trust and confidence. My goal is having clients be completely satisfied with the professional and caring service they have received.

The role of technology is rapidly changing how the real-estate market functions in this country today. Gerharter Realtors is embracing these new mediums of communication to better serve our customers. We have created our e-family to better place important information in your hands to help you with your housing needs. As a part of Gerharter Enterprises we have access to a broader range of additional services and resources to better assist you. Visit me at my Web Site, Blog, Facebook, Twitter, You Tube or Pinterest. Please check out our helpful resources on Sellers Tips, Buyers Tips, Foreclosure Tips, and Mortgage Tips. For a personal consultation please visit our Office.

It seems that the dream of past generations was to pay off a mortgage. The dream of today’s young families is to get one. I would love to hear from you, about your Real Estate Dreams and questions.

Email me at scott@gerharterrealtors.com.

Buying a Home After a Short Sale or Foreclosure

Written by John McGeough & Anthony Lamacchia,

In Massachusetts over 80,000 homeowners lost their homes through a foreclosure or short sale since the housing crisis started in 2006. Some of these people had to short sale their home due to job relocation or they may have had to sell their home due to illness or the loss of a job. And some people whose homes were foreclosed have since gotten themselves back on their feet financially and are ready to purchase a home again.

The good news is you can buy a home after a short sale or foreclosure, but there are just a few eligibility requirements to follow.

That’s why lately we’ve had a lot of people ask us how soon they can purchase a home after doing a short sale or foreclosure. They realize this is one of the best times to buy a home: mortgage rates are at record lows, there’s an increase of desirable, affordable homes on the market to choose from, and apartment rents have gone up, actually making it cheaper to own a home than it is to rent in many areas. They’re ready to make a fresh start but aren’t sure when—or if—they can buy a home again.
The truth is many of these people fear that after they lose their home they will never be able to buy again. They may get conflicting information on how long they have to wait to get a loan or if they would even be eligible.

How Does a Short Sale Affect Your Credit?

1. A short sale and a foreclosure will have a negative impact on your credit score, but in every situation we have seen, the impact is less with a short sale.

2. The biggest impact to your credit is always caused by late payments and with foreclosures taking much longer than a short sale, there are more late payments for the credit bureaus to account for.
3. Credit bureaus are more forgiving if the loan is “settled,” like it is in a short sale, while in a foreclosure or a deed in lieu, a “default” is recorded.

The lender will have to verify that you have re-established your credit as well as consider other factors, such as your current salary, your debt-to-income ratio, and your savings.

How to Prepare to Buy Again After a Short Sale or Foreclosure

The first thing you need to do is get your credit back in shape. Here are some of the basics:

Establish credit at least one year before you apply for loan

Pay down or, if you can, pay off any credit cards you have

Get rid of credit cards you don’t use

Identify unnecessary expenses, cut back on spending

Have documentation for income, expenses, credit history

Figuring Out How Much You Can Afford

The next thing you will need to do is figure out how much you can comfortably afford each month in order to own a home. Calculate monthly expenses such as car and credit card payments to get an idea of what you’ll be able to afford. Use our Mortgage Calculator or download our Home Buyer Budget Worksheet to figure out your expenses.

One of the best ways you can make buying again easier is to hire a qualified mortgage broker who specializes in doing loans after a short sale or foreclosure. A good mortgage broker will verify your credit and also verify your income. The reason this is so important is because it’s a key component that underwriters use to insure you qualify. If it is not done at the preapproval stage it can lead to a very disappointing turn down further into the process.

Of course the mortgage payment is just one cost of owning a home. Be prepared to spend a portion of your income on repairs, heating and cooling costs, and overall maintenance of your home as well.
But by following these guidelines and getting your finances back in order you’ll be able to enjoy the benefits of owning a home again.

My name is Scott Grebner and I have been helping my clients realize their own personal real estate dreams. Real estate is a relationship-based business that works best when client relationships are built on trust and confidence. My goal is having clients be completely satisfied with the professional and caring service they have received.

The role of technology is rapidly changing how the real-estate market functions in this country today. Gerharter Realtors is embracing these new mediums of communication to better serve our customers. We have created our e-family to better place important information in your hands to help you with your housing needs. As a part of Gerharter Enterprises we have access to a broader range of additional services and resources to better assist you. Visit me at my Web Site, Blog, Facebook, Twitter, You Tube or Pinterest. Please check out our helpful resources on Sellers Tips, Buyers Tips, Foreclosure Tips, and Mortgage Tips. For a personal consultation please visit our Office.

It seems that the dream of past generations was to pay off a mortgage. The dream of today’s young families is to get one. I would love to hear from you, about your Real Estate Dreams and questions.

Email me at scott@gerharterrealtors.com.

VA Loan Foreclosure Facts

DirectVALoans.com

It is no coincidence VA loans have the lowest foreclosure rate in the country. Free mortgage counseling and the VA guarantee help make veterans’ mortgages less vulnerable in tough financial climates.

A foreclosure can happen when a borrower defaults or cannot repay a mortgage debt, and the lender chooses to take possession of the property to recover some of the loss. This quick Q &A can help you understand your options and the consequences of foreclosures.

Q: What should I do if I am having trouble making my VA loan payments?

A: VA borrowers facing financial hardship should use the free VA mortgage counselor assigned to their loan. Mortgage counselors are employed by the VA to help you. They are trained to provide sound advice that can assist financially-stressed veterans get back on track and often keep their homes.

VA counselors can work directly with your loan servicer to negotiate repayment plans, forbearance, and even loan modifications – all great home-saving alternatives to foreclosure.

Q: What happens if I just can’t avoid VA loan foreclosure?

A: If foreclosure unavoidable, it may directly affect your VA loan entitlement. If the government suffers any loss as a result of your delinquency, the amount of entitlement that was used for the VA loan cannot be restored until the loss is paid back.

Q: Can I get another VA home loan after foreclosure, and how long will it take?

A: Having a foreclosure in your history doesn’t necessarily disqualify you for a future VA loan. Like bankruptcy, a foreclosure may be disregarded in VA loan qualifying if it happened more than two years ago. Many VA borrowers who have a foreclosure in the past have been able to repair their credit and get another VA home loan. Lenders review applications of potential borrowers with foreclosures in their past on a case-by-case basis. You’ll have to be able to explain the circumstances that led to the hardship. And, as long as you have repaid the loss back to the VA and kept your credit in good standing since the incident, you may be able to qualify again for a VA home loan in the future. Repaying the loss to the VA is important for restoring entitlement needed to get another government- backed loan. How long it takes to qualify again may depend on how soon you recover financially.

For more about VA loans and foreclosure, contact an experienced VA mortgage professional.

My name is Scott Grebner and I have been helping my clients realize their own personal real estate dreams. Real estate is a relationship-based business that works best when client relationships are built on trust and confidence. My goal is having clients be completely satisfied with the professional and caring service they have received.

The role of technology is rapidly changing how the real-estate market functions in this country today. Gerharter Realtors is embracing these new mediums of communication to better serve our customers. We have created our e-family to better place important information in your hands to help you with your housing needs. As a part of Gerharter Enterprises we have access to a broader range of additional services and resources to better assist you. Visit me at my Web Site, Blog, Facebook, Twitter, You Tube or Pinterest. Please check out our helpful resources on Sellers Tips, Buyers Tips, Foreclosure Tips, and Mortgage Tips. For a personal consultation please visit our Office.

It seems that the dream of past generations was to pay off a mortgage. The dream of today’s young families is to get one. I would love to hear from you, about your Real Estate Dreams and questions.

Email me at scott@gerharterrealtors.com.

Buy After Foreclosure or Short Sale

By Andrew Robb

The housing market slump has left many owners without options other than renting. Perhaps you have had to short sale your home or you’ve been foreclosed on your home you thought you could afford or refinance if there was a financial emergency, but when the housing market crashed about 50% since the peak, you were left with no equity (value of home minus mortgage balance).

All is not lost and you can get yourself back on track for purchasing another home in the near future. Many lending institutions will give you a loan even if your FICO credit score is under 600, however the down payment requirement is quite substantial (up to 35%) and interest rates will be higher. To qualify for a mortgage after a short sale or foreclosure, most lenders like to see a FICO score of about 620. Use this helpful table to find out how long you must wait after a short sale, foreclosure or bankruptcy before you can qualify for another mortgage.

How long must a buyer wait after a bankruptcy, short sale or foreclosure before they can get mortgage financing?

If applying for an FHA loan

Short sale or foreclosure: 3 years from date of sale (completion)
Chapter 7 bankruptcy: 2 years from discharge date
Chapter 13 bankruptcy: 1 year of the payout must elapse and payment information must be satisfactory; also requires permission of Bankruptcy Trustee

If applying for a VA loan

Short sale: no waiting period is required if Automated Underwriting Approval is obtained
Foreclosure: 2 years from date of sale (completion)
Chapter 7 bankruptcy: 2 years from discharge date
Chapter 13 bankruptcy: 1 year of the payout must elapse and payment information must be satisfactory; also requires permission of Bankruptcy Trustee

If applying for a conventional loan

Short sale: 2 years from date of sale (completion) with maximum financing of 80%; 4 years from date of sale (completion) with maximum financing of 90%
Foreclosure: 7 years from date of sale (completion)
Chapter 7 bankruptcy: 4 years from discharge date
Chapter 13 bankruptcy: 2 years from discharge date or 4 years from dismissal date

To boost your chances of obtaining a mortgage again, there are a few things you can do:

· Take out a major credit card. This isn’t as hard as one would think because creditors know you can’t file bankruptcy again for at least 7 years and you no longer have any debt.

· Stay at your current job for at least another year or two.

· Save up a down payment of 10 to 15%.

· Do everything you can to pay your existing bills on time, every time.

My name is Scott Grebner and I have been helping my clients realize their own personal real estate dreams. Real estate is a relationship-based business that works best when client relationships are built on trust and confidence. My goal is having clients be completely satisfied with the professional and caring service they have received.

The role of technology is rapidly changing how the real-estate market functions in this country today. Gerharter Realtors is embracing these new mediums of communication to better serve our customers. We have created our e-family to better place important information in your hands to help you with your housing needs. As a part of Gerharter Enterprises we have access to a broader range of additional services and resources to better assist you. Visit me at my Web Site, Blog, Facebook, Twitter, You Tube or Pinterest. Please check out our helpful resources on Sellers Tips, Buyers Tips, Foreclosure Tips, and Mortgage Tips. For a personal consultation please visit our Office.

It seems that the dream of past generations was to pay off a mortgage. The dream of today’s young families is to get one. I would love to hear from you, about your Real Estate Dreams and questions.

Email me at scott@gerharterrealtors.com.

How a Bankruptcy or Foreclosure Affects VA Loan Applications

Posted by Chris Birk

Bankruptcy and foreclosure have become increasingly common in the rough economic stretch of the past few years.

These are tough financial decisions that can significantly affect a consumer’s credit score and overall fiscal health. But veterans and active duty military members, it’s important to know that a bankruptcy or foreclosure doesn’t mean you have to forget purchasing a home with your VA entitlement.

A bankruptcy or foreclosure doesn’t automatically disqualify you from getting a VA loan. For the first two years following the event, it will be all but impossible. But if you use that time to rebuild your devastated credit, a VA loan can still be in your future.
A bankruptcy or foreclosure doesn’t automatically disqualify you from getting a VA loan. For the first two years following the event, it will be all but impossible. These events won’t just disappear from your credit report. And lenders will consider them as negative compensating factors that in combination with other problems can kill a loan application.

But if you commit to rebuilding your credit and making on-time payments, VA loan can still be in your future.

Bankruptcy

There are two major types of personal bankruptcy protection — Chapter 7 and Chapter 13 —and both will crush your credit. Consumers can expect their credit scores to drop from 130 to 240 points.
That alone will make qualifying for a VA loan incredibly difficult, but lenders also require borrowers to be a “satisfactory credit risk.” VA-approved lenders want to see that prospective borrowers can return to a solid financial footing over a two-year period.

The VA has some exceptions that allow military members to participate in the program before that two-year mark. But, remember that VA-approved lenders, and not the VA, ultimately issue the loan. They have more stringent standards that rise above the VA’s requirements.

And that means there’s almost no way for a borrower to secure financing until at least the two-year mark after a bankruptcy discharge.

It’s also important to remember that a prior bankruptcy never just disappears. If you have any slips after a bankruptcy is on your record, even if they’re only a couple late payments on small accounts, a lender may decide you’re too much of a risk and deny your loan application. A lender will also look to make sure you haven’t had a late payment in at least the previous 12 months. In the wake of a bankruptcy filing and discharge, a single late payment in that span will all but nullify your loan application.

Foreclosure

Foreclosure can take several forms: foreclosure, short sale or a deed-in-lieu of foreclosure.
Foreclosure is when the bank takes back your house through formal proceedings because you can’t make the payments. A short sale is when the lender allows an underwater homeowner to sell the home for less than what is owed, in order to recover at least some of the cost.

A deed-in-lieu allows a homeowner to return the house to the lender without formal foreclosure proceedings. None are particularly beneficial outcomes for borrowers, and all can prove more problematic for military buyers.

In terms of a credit crunch, none is quite as damaging as a bankruptcy, which can shave anywhere from 85 to 160 from your score. Although your credit score won’t be quite as devastated, you will still be unlikely to qualify for another loan for the first two years and will need to work hard to rebuild your credit.

Possibly compounding the issue, countless service members have been told they could never again qualify for a VA loan if they had a previous VA loan foreclosed upon. That’s simply false. A unique concept called second-tier entitlement can help veterans in this situation once they’re beyond that two-year window.

Each of these financial events can be devastating, but they don’t determine your future. Mistakes and tough times in the past can put homeownership out of reach for a time. But if you’re committed to rebuilding your financial profile and meeting all obligations moving forward, the VA home loan program may still be a viable vehicle for a home purchase.

My name is Scott Grebner and I have been helping my clients realize their own personal real estate dreams. Real estate is a relationship-based business that works best when client relationships are built on trust and confidence. My goal is having clients be completely satisfied with the professional and caring service they have received.

The role of technology is rapidly changing how the real-estate market functions in this country today. Gerharter Realtors is embracing these new mediums of communication to better serve our customers. We have created our e-family to better place important information in your hands to help you with your housing needs. As a part of Gerharter Enterprises we have access to a broader range of additional services and resources to better assist you. Visit me at my Web Site, Blog, Facebook, Twitter, You Tube or Pinterest. Please check out our helpful resources on Sellers Tips, Buyers Tips, Foreclosure Tips, and Mortgage Tips. For a personal consultation please visit our Office.

It seems that the dream of past generations was to pay off a mortgage. The dream of today’s young families is to get one. I would love to hear from you, about your Real Estate Dreams and questions.

Email me at scott@gerharterrealtors.com.

Obtaining an FHA Home Loan with Bad Credit or Bankruptcy

By Daniel Duffield

Times have been tough for many homeowners whose credit scores have greatly suffered as a result of the housing market collapse. For borrowers with bad credit, qualifying for a home loan can seem like a daunting task, especially following a credit-damaging event such as bankruptcy, foreclosure, or short sale. However, it’s never too late to turn things around; though challenging, borrowers who wish to obtain an FHA loan after bankruptcy can qualify, with some patience and financial responsibility.

FHA Loan After a Bankruptcy

Many people wonder if they can get a FHA home loan after a bankruptcy during these recent, troubled years. The short answer: it depends.

Chapter 7 Bankruptcy Guidelines

For borrowers that have filed Chapter 7 Bankruptcy, they must be discharged a minimum of two years. Anyone with a discharge date less than two years old will be faced with some strenuous documentation. These exceptional situations may still be considered, so be prepared to state your case. Borrowers need to provide proof of beginning new credit history with satisfactory payments. Alternatively, if the borrower has decided not to borrow again after the bankruptcy, they must outline the causes for the bankruptcy. Borrowers will have significantly better chances of getting approved for an FHA loan with bankruptcy, if they can successfully prove to a lender that they can successfully manage typical home expenses and that they have effectively “learned their lesson.” These individuals should look for the lowest mortgage rates so that they have a better chance of keeping up with the payments.

 If you have filed for Chapter 7 Bankruptcy, you should:

Wait a minimum of 2 years after being discharged
Collect and provide proof of new, spotless credit history to your lender
If you do not plan to borrow again, outline the causes for the initial bankruptcy

Chapter 13 Bankruptcy Guidelines

For individuals currently participating in a Chapter 13 repayment plan, the first step make twelve months of on-time payments into the plan. This will signal to a lender that the borrower has become more responsible in managing finances. Secondly, borrowers will need to get approval from the bankruptcy court to enter into the mortgage agreement. An FHA loan does not have any penalties for prepayment and the rates are excellent. People who filed a Chapter 13 bankruptcy within the last few years should contact a FHA lender to discuss the possibility to get approved for a home loan.

If you have filed for Chapter 13 Bankruptcy, you should:

Make 12 months of payments on-time
Get approval from the bankruptcy court

For people involved with Consumer Credit counseling, the guidelines are akin to the Chapter 13 guidelines. Borrowers need to prove they have made on-time payments for at least the past 12 months and get their counseling agency’s recommendation to proceed with a FHA loan after bankruptcy.

If you find yourself in any type of bankruptcy or credit counseling, it is vitally important that you make all payments on time. In addition to improving your chances of acquiring a loan, this will prevent any additional negative items appearing on your credit report.

FHA Loan After a Foreclosure

As with bankruptcy, foreclosure does not necessarily ruin your chances of acquiring an FHA loan. While foreclosure does severely damage a borrower’s credit rating, borrowers who had no control over the foreclosing of their properties can still qualify and acquire an FHA loan with patience and prudent financial management.

Extenuating Circumstances

To qualify for an FHA loan, post-foreclosure borrowers must be able to provide excusing reasons for their foreclosure. Specifically, the cause of the foreclosure must be through extenuating circumstances which the borrower could have no control over. For instance, serious illness, the death of a spouse, or a job transfer all occur beyond the control of the borrower and thus would circumstantially excuse a foreclosure, allowing the borrower to reapply once the foreclosure is sufficiently dated.

Waiting Period

In terms of the mandatory waiting period, borrowers who have endured a foreclosure must wait a minimum of three years from the completion date of their foreclosure, i.e. the date in which the deed transfers to the next owner, before they are able to qualify for an FHA loan. This figure is deceptive, however, since the last thing a borrower should do after a foreclosure is to passively wait. If you intend to secure an FHA loan as soon as possible, the three years following a foreclosure will be the most significant factor for a lender in determining whether or not you will qualify.

Re-establishing Credit

After a foreclosure or similar credit-damaging event, re-establishing credit is the most important step for borrowers who would pursue another loan. When applying for an FHA loan after a foreclosure, lenders will scrutinize your credit history, and many require at least four new lines of credit, all of which must be more than two years old. Therefore, treating the waiting period literally will end up costing you much more time than if you immediately begin new credit lines following your foreclosure.

Proving Reliability

Furthermore, qualifying for an FHA loan post-foreclosure requires convincing the lender that you are the definition of financial responsibility and that you deserve another chance. In doing so, it is critically important to make payments on time. Late payments will require letters of explanation to be considered by the FHA underwriter overseeing your loan, so save yourself the trouble and avoid making late payments.

FHA Loan After a Short Sale

Purchasing a home after a short sale may seem like quite a challenge; however, if your short sale was the result of extenuating circumstances, you should have no problem qualifying for an FHA loan.
Waiting Period Removed for Some

In fact, the Federal Housing Administration recently made changes to loan policy, making it easier than ever for borrowers to acquire an FHA loan. Although the waiting period for post-short sale borrowers has traditionally been three years, new regulations have eliminated the waiting period for borrowers who were current on their mortgage payments during the time of the short sale and who made all mortgage and installment debt payments on-time within the past twelve months.

Qualifying after Default

Even a borrower in default at the time of the short sale may qualify for an FHA loan sooner than three years with extenuating circumstances, provided his or her credit remained at a reasonable score until the default.

However, keep in mind that these changes only reflect the official FHA loan guidelines; when seeking a loan, qualification rests on the discretion of the lender, and borrowers may find many lenders that will refuse to make offers to anyone with short sales less than three years old. Needless to say, any borrower who engaged in a short sale to take advantage of weakening market conditions and intends to buy a similar property in the same area will not qualify for an FHA loan.

Where to Find an approved FHA Lender Near You

If you are considering taking out an FHA loan, it is important to shop around to find the absolute best rates for your loan. Due to the large amounts of money in an FHA loan, small adjustments in interest rates can make a significant difference in the total cost of your loan. To find the best possible rates for your future FHA loan, simply fill out our Lender411’s FHA Mortgage Request a Quote.

My name is Scott Grebner and I have been helping my clients realize their own personal real estate dreams. Real estate is a relationship-based business that works best when client relationships are built on trust and confidence. My goal is having clients be completely satisfied with the professional and caring service they have received.

The role of technology is rapidly changing how the real-estate market functions in this country today. Gerharter Realtors is embracing these new mediums of communication to better serve our customers. We have created our e-family to better place important information in your hands to help you with your housing needs. As a part of Gerharter Enterprises we have access to a broader range of additional services and resources to better assist you. Visit me at my Web Site, Blog, Facebook, Twitter, You Tube or Pinterest. Please check out our helpful resources on Sellers Tips, Buyers Tips, Foreclosure Tips, and Mortgage Tips. For a personal consultation please visit our Office.

It seems that the dream of past generations was to pay off a mortgage. The dream of today’s young families is to get one. I would love to hear from you, about your Real Estate Dreams and questions.

Email me at scott@gerharterrealtors.com.

What is an FHA loan?

By Daniel Duffield

An FHA loan is a loan that is insured by the Federal Housing Administration. Since the FHA guarantees to pay the balance in the event of a loan defaulting, rather than the lender having to write it off, FHA loans are open to people with poor credit history or to those who are unable to make large down payments. A FHA Loan can help you acquire a home with as little as 3.5%, instead of the high percentages required to obtain a typical conventional loan. This allows a great advantage for first time home buyers or anyone who wants smaller down payments to buy a home.
What is the FHA?

The Federal Housing Administration was created in 1934 to combat the effects of the Great Depression by providing citizens with access to affordable loans, thus providing many Americans with the means to purchase a home. Since its initiation, the FHA has helped to finance over 34 million homes, and FHA loans remain popular today.

What are the qualifications for an FHA loan?

If you are considering an FHA loan, you must be able to meet FHA requirements. Firstly, to even consider obtaining an FHA loan, you must be able to pay the minimum 3.5% down payment on the loan. Next, you must pay the 2.25% closing cost, however, this amount may be added to the loan itself. Additionally, to secure an FHA loan you must be in decent credit standing; if you have filed for bankruptcy or undergone foreclosure, you can still qualify as long as you have raised your credit rating since then. Moreover, you must be able to show a record of continuous income to prove to a lender your reliability. Finally, you must pay the title costs, which are fees related to the transfer of a property title.

Be able to make a 3.5% down payment
Pay 2.25% closing cost (can be added to the loan)
Be able to show proof of 3 years of continuous income
Have proof that you have paid all bills continuously for the past 3 years
If you have filed for bankruptcy, it must be at least 2 years old and you must have since had a good credit standing (Chapter 7 - 2 years, Chapter 13- 1 year)
If you’ve had a foreclosure, it must be at least 3 years old and you must have since had a good credit standing
Pay all title related costs (title search, title insurance, etc.)
Who should get an FHA mortgage loan?

If you are unfamiliar with FHA loans or inexperienced with loans in general, an FHA loan might be the loan for you. Typically, loans secured by the Federal Housing Administration best fit first-time home buyers or borrowers with low to moderate income. This dates back to the creation of the FHA as a means of stimulating the economy during the Great Depression by making it easier for people with lower credit scores or less income to secure a loan and purchase a home. As such, FHA mortgage loans tend to be best for those who are otherwise unable to acquire a conventional mortgage loan, though this is not always the case. Here are a few questions that you might ask yourself to determine whether or not an FHA loan is your optimal choice:

Have I had a steady income for the last two years?

When applying for an FHA loan, it is important to provide your lender with proof of two years of steady income. Although not mandatory, your chances of qualifying for an FHA mortgage loan without proof of income are significantly lower.

Do I have a low credit score?

FHA loans have low credit requirements, which enable many people with bad credit to secure loans. Even after filing for bankruptcy or undergoing a foreclosure, you may still have the necessary credit to qualify for an FHA loan, provided you have improved your credit standing since then.

Will I be able to put forward a large down payment?

If you are unable to afford putting down a large sum for a down payment, you should consider taking out an FHA mortgage loan. FHA loans down payments can be as low as 3.5%, considerably lower than conventional mortgages.

Will an FHA loan cover the cost of my potential home?

The Federal Housing Administration has separate loan limits for each county. If your potential residence costs more than the maximum limit for an FHA loan, you should consider alternatives.

Do I qualify?

Last but certainly not least, in order to even consider getting an FHA loan, you must first know whether or not you qualify. Make sure to get pre-approved before you start looking for your home.

What are the advantages to an FHA loan?

For the right borrower, FHA home loans have many advantages. For instance, FHA loans are more affordable than conventional loans since down payments can be as low as 3.5%. In addition, when acquiring an FHA loan, lenders tend to be more lenient in considering borrowers’ credit rating, since the Federal Housing Administration insures that the loan will be paid in full. Consequently, FHA loans can be acquired even by borrowers who have filed for bankruptcy or undergone foreclosure.
Furthermore, FHA loans do not include prepayment penalties.

Low down payment requirement of only 3.5%, with credit scores as low as 580.
More lenient on credit ranking as opposed to a conventional loan
Borrower can add closing costs to the loan amount
Offer very similar rates to conventional mortgages
Government has recently increased FHA Loan amounts to qualify more types of property
No prepayment penalties
Can still be acquired after bankruptcy or foreclosure

What are the disadvantages of an FHA loan?

The major disadvantage of FHA loan is that they include mandatory mortgage insurance, thus adding to the cost of the loan. Mortgage insurance payments are divided into an upfront mortgage premium of 1.75% and an annual premium charged in small monthly installments. Another disadvantage of FHA loans is the fact that many properties are ineligible (although this number is decreasing). Finally, FHA loans are less flexible and offer far less options than conventional loans.

Mortgage insurance premiums, upfront and annual
Not all properties qualify
Limited options compared to other loans

What are the FHA limits on loan amounts?

The limits on the maximum amount a borrower can receive from the FHA are relative to the housing costs in the area where the borrower’s intended property is located. In other words, in lower value home areas, limits for FHA loans cap at $271,000, though limits can be as high as $625,500 in areas with high valued homes. Regardless of your credit score and income, a lender cannot grant you a loan that exceeds FHA limits for that particular area.

What are the basic types of FHA loans?

FHA loans come in several different types, the most basic being adjustable rate and fixed rate FHA loans. In addition to these, there are also graduated payment mortgages, which are loans for homebuyers that expect their income to significantly rise within the next 5 to 10 years. Furthermore, Growing Equity Mortgages are special FHA loans that allow low income borrowers who expect an increase in their income to buy a house with incrementally increasing payments. As payments increase, the additional expenses go toward the mortgage’s principal, thereby reducing the term of the mortgage. Finally, Energy Efficient Mortgages (EEM) are designed to aid homeowners or homebuyers drastically decrease their monthly utility bills, incorporating these efficiency improvements into their FHA loan.

FHA Loan: Adjustable Rate
FHA Loan: Fixed Rate
Graduated Payment Mortgages
Growing Equity Mortgages
Energy Efficient Mortgage
203(k) Mortgage Loan

What Refinance Options are Available with FHA Loans?

For homeowners considering their refinance options, the FHA offers a standard refinancing program for homeowners with conventional mortgages as well as pre-existing FHA mortgages. FHA refinancing carries the same advantages of FHA loans, such as relaxed credit requirements and lower than average mortgage rates. In addition, homeowners with an existing FHA mortgage have the option of performing a streamline FHA refinance, allowing them to skip verification for credit score, income, and employment history, making the process much quicker and more convenient. In addition, FHA streamlined refinancing does not require a borrower’s property to be reappraised; instead, the FHA uses the original selling price of the home, significantly benefiting homeowners with underwater houses.

What types of property are insured by the FHA?

The Federal Housing Administration insures four types of properties: single family homes, condominiums, manufactured homes, and duplex units. For single family homes, the FHA will finance up to 97% of the home purchase price. Condominiums are also insured by the FHA; however, the building must have four or more units for personal residence, and condominiums that were previously used for renting may be ineligible. Manufactured homes are eligible for FHA Mortgage loans as long as the floor area of the property is 400 square feet or larger. Mortgages for manufactured homes must also cover both the home and the location where the home is situated. Duplexes, triplexes, and fourplexes all qualify for FHA loans as long as the property is solely owned by one person or family, though other families may live in them. Furthermore, all units of the property must be inhabited.

Single family homes
Condominiums
Manufactured homes
Duplex units

Where can I get an FHA loan?

Comparing multiple FHA mortgage lenders is always a wise idea when searching for the lowest and best mortgage rates for a FHA home loan.FHA mortgages are not actually originated by the FHA. The FHA merely provides insurance to cover private loans. As a result, the FHA loan process is not standardized. Terms and qualification requirements vary from lender to lender. Compare lenders in order to find the best terms to meet your needs. There are three elements of each offer you’ll want to check on when comparing:

1. Interest rate.
Find a lender that offers a solid low interest rate. The lower the rate is, the better, because this will mean less money out of your pocket in the long run. But don’t stop after comparing interest rates. A low interest rate may be a sign of high costs elsewhere in the deal.

2. Closing costs.
Many borrowers find themselves blindsided by high closing costs and hidden fees when securing a loan. Check up on these costs when comparing lenders. Often, a loan with a low interest rate will actually cost you more money due to high closing costs. Be careful.

3. Fixed or adjustable.
Adjustable rate mortgages always have lower initial interest rates than fixed rate mortgages, which could save you money, but be cautious. The interest rate for an adjustable rate mortgage may increase over time, costing you more. A fixed rate mortgage will never increase or decrease, but it will likely be higher overall than a similar adjustable rate mortgage. Make sure you know which is which, and make sure you know which variety you are signing up for.

Look at each of these elements when comparing different FHA lenders. It can be helpful to submit a request for quotes to a third party company that specializes in gathering mortgage rates. Many such companies will provide you with personalized quotes from a variety of lenders, and they’ll do it for free. This can save you time, stress, and effort, and you won’t have to deal with repetitive paperwork.

Regardless of how you find FHA lenders, compare these three elements and make sure you know what you’re looking for, otherwise you may find that your comparison is worthless.

My name is Scott Grebner and I have been helping my clients realize their own personal real estate dreams. Real estate is a relationship-based business that works best when client relationships are built on trust and confidence. My goal is having clients be completely satisfied with the professional and caring service they have received.

The role of technology is rapidly changing how the real-estate market functions in this country today. Gerharter Realtors is embracing these new mediums of communication to better serve our customers. We have created our e-family to better place important information in your hands to help you with your housing needs. As a part of Gerharter Enterprises we have access to a broader range of additional services and resources to better assist you. Visit me at my Web Site, Blog, Facebook, Twitter, You Tube or Pinterest. Please check out our helpful resources on Sellers Tips, Buyers Tips, Foreclosure Tips, and Mortgage Tips. For a personal consultation please visit our Office.

It seems that the dream of past generations was to pay off a mortgage. The dream of today’s young families is to get one. I would love to hear from you, about your Real Estate Dreams and questions.

Email me at scott@gerharterrealtors.com.

FHA Loan Guidelines - What You Need to Know Before You Apply

By Daniel Duffield

Loan. In order to qualify for the FHA loan requirements, you must meet these guidelines:

First Time Buying A Home

The FHA program is well suited to meet the financial needs of First time home buyers and encouraged to apply for FHA loans.

Social Security Requirement

Part of the FHA loan requirement : You be a legal resident of the United States, have a valid Social Security number, and be of the legal age to obtain a mortgage in your state.

Income

In order to prove to a lender that you have the fiscal responsibility to take a loan, you must have a consistent or rising income for at least two years.

Employment History

In addition to income, a requirement for an FHA loan: you must have a stable employment history and have worked at least two years with the same employer.

Credit Score

Your credit score must be 530 or above as part of the requirements for an FHA loan. Keep in mind, however, that you will have to pay a minimum down payment of 10% unless your credit is 580 or above, which qualifies you for a minimum down payment of only 3.5%.

Debt to Income

You must have a debt to income ratio of at most 31% to qualify for an FHA loan. The debt to income ratio is the total cost of the monthly mortgage payment against the borrower’s gross income.

For example, if you pay $1,000 total a month on your mortgage and earn a gross income of $4,000 a month, your debt to income ratio would be 25%.

FHA Loan Requirement : Total fixed payment vs. Effective Income – maximum ration = 43% (min. approximately 30%)

Your total fixed payment to effective income must not exceed 43% and must be a minimum of approximately 30%. Your total fixed payment is the sum of your monthly payments including mortgage payments as well as all recurring monthly fees (including car loans, student loans, credit cards, etc.).

Therefore, your total fixed payments cannot exceed 43% of your gross monthly income and must be greater than 30%. This ratio basically shows your lender that you can afford the loan.
Bankruptcy must be sufficiently old

If you have filed for Chapter 7 Bankruptcy, you must wait at least two years since borrower’s discharge date, not to be confused with the date which you filed for bankruptcy.

If you have filed for Chapter 13 Bankruptcy, you must have made and verified bankruptcy payments for at least a year.

Any bankruptcy on your credit report must be at least two years old. You’ll probably need to wait longer than that, though, if you want to qualify for one of the lowest mortgage rates you can.
Foreclosure Must Be Sufficiently Old

Although FHA mortgages are not typically given to borrowers who have had property foreclosed, exceptions can be made if the foreclosure is at least three years and credit has since improved and remained consistently good.

Closing Costs

When taking out an FHA loan, be prepared to pay the 2.25% closing costs. If you cannot afford them, however, these fees can be added to the loan.

Title Costs

To secure an FHA loan, you must be able to pay the title costs, which are fees relating to the change of ownership on a title.

My name is Scott Grebner and I have been helping my clients realize their own personal real estate dreams. Real estate is a relationship-based business that works best when client relationships are built on trust and confidence. My goal is having clients be completely satisfied with the professional and caring service they have received.

The role of technology is rapidly changing how the real-estate market functions in this country today. Gerharter Realtors is embracing these new mediums of communication to better serve our customers. We have created our e-family to better place important information in your hands to help you with your housing needs. As a part of Gerharter Enterprises we have access to a broader range of additional services and resources to better assist you. Visit me at my Web Site, Blog, Facebook, Twitter, You Tube or Pinterest. Please check out our helpful resources on Sellers Tips, Buyers Tips, Foreclosure Tips, and Mortgage Tips. For a personal consultation please visit our Office.

It seems that the dream of past generations was to pay off a mortgage. The dream of today’s young families is to get one. I would love to hear from you, about your Real Estate Dreams and questions.

Email me at scott@gerharterrealtors.com.

FHA Loan Requirements

FHA Loan Requirements in Detail

Gathering your Information - Employment, Savings, Credit, and Personal.

Employment History Matters. Information from here is needed to show the FHA that you have had an income from the last two years. These are required documents that must be complete:

The most recent two years tax returns.
The most recent two years W-2’s, 1099’s, etc.
The most recent pay stubs covering one month period.

Savings Information. “Count your pennies ,the dollars will do the rest.” Information from here shows how responsible you are for saving money. These are required documents that must be complete:

Most recent bank statements - 3 months complete showing all your accounts with all pages.
Most recent statement from retirement, 401k, mutual funds, etc..

Information about your Credit. This information is required to make sure you don’t have issues with borrowed money, and that you can make payments on time. These are required documents that must be complete:

 Bills- Most recent statements, showing minimum payments and account numbers with information.
The Name, Address, and Phone number of your landlord or twelve months cancelled rent checks.

Personal Information. Keeping it Personal, and keeping it about you. These are required documents that must be complete:

Copy of Current Drivers License.
Copy of Social Security Card.

These are the requirements needed in order to process your FHA Loan application.

See if You Qualify an FHA Loan
What are FHA Requirements Concerning Mortgage Insurance?
While the Federal Housing Administration insures loans in order to protect lenders from expensive defaults, mortgage insurance fees supply the capital necessary to provide this protection. Essentially, mortgage insurance premiums allow the FHA to insure loans, thus making mortgages more accessible to potential homebuyers that lenders may consider to be bigger risks.

All borrowers of FHA-insured loans who have not put at least 20% down must pay two forms of mortgage insurance premiums: up-front and annual. Up-front Mortgage Insurance Premiums (UFMIP) include the up-front charges that must be paid to the FHA at the time of closing, though they may instead be inserted into the loan balance. UFMIP costs equal 1.75% of the loan balance. Annual Mortgage Insurance Premiums (MIP) are monthly installments included into a borrower’s monthly mortgage statement. MIP fees fluctuate based on down payment and loan term length.
Where to Find an approved FHA Lender Near You

If you are considering taking out an FHA loan, it is important to shop around to find the absolute best rates for your loan. Due to the large amounts of money in an FHA loan, small adjustments in interest rates can make a significant difference in the total cost of your loan. To find the best possible rates for your future FHA loan, simply fill out our Lender411’s FHA Mortgage Request a Quote.

My name is Scott Grebner and I have been helping my clients realize their own personal real estate dreams. Real estate is a relationship-based business that works best when client relationships are built on trust and confidence. My goal is having clients be completely satisfied with the professional and caring service they have received.

The role of technology is rapidly changing how the real-estate market functions in this country today. Gerharter Realtors is embracing these new mediums of communication to better serve our customers. We have created our e-family to better place important information in your hands to help you with your housing needs. As a part of Gerharter Enterprises we have access to a broader range of additional services and resources to better assist you. Visit me at my Web Site, Blog, Facebook, Twitter, You Tube or Pinterest. Please check out our helpful resources on Sellers Tips, Buyers Tips, Foreclosure Tips, and Mortgage Tips. For a personal consultation please visit our Office.

It seems that the dream of past generations was to pay off a mortgage. The dream of today’s young families is to get one. I would love to hear from you, about your Real Estate Dreams and questions.
Email me at scott@gerharterrealtors.com.

FHA Credit Requirements: How Low Can You Go?

By Daniel Duffield

FHA Credit Score Requirements:

530: Minimum credit score required to qualify for an FHA loan and satisfy FHA Credit Requirements

530-579: Credit scores in this range will qualify for a minimum down payment of 10%

580: Minimum credit score required to qualify for a minimum down payment of 3.5%

620: Accepted by some mortgage lenders

640: Typical minimum credit score required by mortgage lenders.

While loans insured by the Federal Housing Administration (FHA) put much less emphasis on credit, the borrower’s credit score still matters. In addition to affecting lender’s interest rates, credit score can make the difference between qualifying for an FHA loan and not, depending on the circumstances.

How low can my credit be to secure an FHA loan?

When it comes to FHA credit requirements and FHA loans, the Federal Housing Administration does not set a universal standard for lenders as the qualifications for receiving an FHA loan. Instead, lenders who offer FHA mortgages specify their own requirements for whom to lend to, within reason. As such, although FHA loan guidelines accept low credit scores, borrowers with low credit may still have some difficulty finding a lender who is willing to give out an FHA loan.

Looking at specific credit scores, most FHA lenders will require a minimum credit score of 620, though many will require as much as 640. While scores in this range will not secure the best mortgage rates, the fact that the Federal Housing Administration insures these loans allows lenders to offer these loans to borrowers that may seem more of a risk. Many lenders will even offer loans to applicants with credit scores under 600, provided that no late payments have occurred in the past twelve months.

How will negative activity on my credit report affect my FHA Credit Requirements?
When arranging loan terms for FHA, overall credit score is usually sufficient for lenders; likewise, the specifics are often insignificant to a lender. In general, lenders are not bothered by charge-offs, collections, or late payments that appear on credit reports unless those payments occurred in connection with a previous mortgage. Nevertheless, try to ensure that your credit report lists as much positive activity as possible.

Can I get an FHA loan without having established credit?
Unfortunately for applicants who have not established credit, lenders will not typically offer a loan to borrowers without a credit score. Exceptions can be made, and in some cases, lenders will agree to work with such applicants if financial responsibility can be proved by some other means.

For most applicants without credit, presenting rent payments or utility payments, as well as phone or internet payments, can allow some applicants to establish what is known as non-traditional credit. With four non-traditional credit accounts, borrowers with no established credit can still acquire an FHA home mortgage loan, however, each lender has a distinctive policy regarding applicants with extremely low credit scores or no score at all, and this option may not always be available.

Will I benefit from having good credit when applying for an FHA loan?
While it’s true that FHA loans generally target borrowers with lower credit scores, having good or excellent credit can save you thousands of dollars over the course of your loan; since interest rates are decided at the lender’s discretion, borrowers with a decent credit standing will receive offers for much lower interest rates than borrowers with poorer credit scores.

Can I get an FHA loan with bad credit?
While having bad credit will certainly hurt your chances, qualifying for an FHA loan with poor credit is far from impossible, though it could take some time. If you have bad credit as a result of a bankruptcy, short sale, or foreclosure, you must first begin to repair your credit score before applying for an FHA loan. In order to qualify with bad credit or with a history of bad credit, a borrower must demonstrate fiscal responsibility to prove to the lender that he or she has made a financial adjustment and should no longer be considered a bad risk. Make sure to make all payments on time to show your lender that you have “learned your lesson.”

Ideally, following these two steps will help you to secure the best FHA mortgage package available:

 Build your credit to at least 640.

Make all payments on time and make sure that no collections or charge-offs have been added to your report within the past twelve months.

Still worried about qualifying? Visit our FHA Requirements page for more information on how to qualify for an FHA loan.

What are the Obstacles to Getting an FHA loan?
For FHA credit requirements and FHA loans, there are less stringent requirements than most other types of loans, many borrowers still find it difficult to qualify or cannot accept the loan for various reasons. When applying for an FHA loan, always remember that you will not be able to acquire the loan without the funds necessary to pay the required 3.5% down payment. Borrowers with outstanding federal tax liens will also find that their applications will be universally denied. Furthermore, those who have made a habit of late payments may discover that lenders shy away from providing loans to less reliable borrowers.

My name is Scott Grebner and I have been helping my clients realize their own personal real estate dreams. Real estate is a relationship-based business that works best when client relationships are built on trust and confidence. My goal is having clients be completely satisfied with the professional and caring service they have received.

The role of technology is rapidly changing how the real-estate market functions in this country today. Gerharter Realtors is embracing these new mediums of communication to better serve our customers. We have created our e-family to better place important information in your hands to help you with your housing needs. As a part of Gerharter Enterprises we have access to a broader range of additional services and resources to better assist you. Visit me at my Web Site, Blog, Facebook, Twitter, You Tube or Pinterest. Please check out our helpful resources on Sellers Tips, Buyers Tips, Foreclosure Tips, and Mortgage Tips. For a personal consultation please visit our Office.

It seems that the dream of past generations was to pay off a mortgage. The dream of today’s young families is to get one. I would love to hear from you, about your Real Estate Dreams and questions.

Email me at scott@gerharterrealtors.com.

7 FHA Issues : How to avoid these common mistakes

By Daniel Duffield

For many and especially first time homebuyers, an FHA mortgage is the best mortgage available, however, qualifying for these loans is not always a simple process. Although one of the easier mortgages to secure, FHA loans still have some barriers that may prevent you from getting your loan. Take a look at these 7 obstacles to acquiring your FHA mortgage.

Low Credit Scores. For all loans, FHA included, credit score is a crucial factor. While credit requirements for FHA mortgages are not as strict as those for conventional mortgages, proving decent creditworthiness can be the difference between securing the loan and being denied.

Late payments. In the process of proving fiscal responsibility to a lender, late payments will make a bad impression and make lenders hesitate to offer you a loan, even those insured by the FHA. If you must make a late payment, make sure to do as much as possible to outweigh the bad with the good, such as making early payments or paying off the account faster than anticipated. Remember, you want to do everything possible to show lenders that you are on solid financial ground.

Tax liens. You aren’t authorized to take on an FHA mortgage if there are any federal tax liens or federal liens of any kind outstanding against you. Make sure to resolve any issues with liens before applying for an FHA loan.

Ongoing Collections. If collection agencies are currently pursuing collections from you, lenders will see this as an indication that you are not financially solvent. Before you attempt to secure an FHA mortgage, make sure there are no ongoing collections linked to any of your accounts.

Cash shortage. Although FHA-insured mortgages require lower down payments than traditional mortgages, the fact remains that a down payment is required. Furthermore, the Federal Housing Administration stipulates that a borrower cannot use an additional loan to make the down payment for an FHA loan. If you cannot afford the minimum 3.5% down payment, you will not be able to acquire an FHA loan.

Foreclosure. If you have had a property foreclosed in the past, lenders may consider you too much of a risk and refrain from providing you a loan. Since the purpose of the FHA is to provide housing for families and individuals who would not otherwise be able to afford it, past delinquencies indicate that a borrower is unable to manage his or her finances responsibly. While acquiring an FHA loan is not impossible under these circumstances, borrowers who have undergone a foreclosure will find it extremely difficult to secure an FHA mortgage. To prove your reliability, you will need to prove that the foreclosure occurred due to circumstances fully beyond your control.

Bankruptcy. As with foreclosures, bankruptcies can be enormous obstacles to getting an FHA loan. Borrowers who file for bankruptcy must wait at least a year before applying for an FHA mortgage; however, waiting two or more years will increase the chances of qualifying. In addition, if you have filed for bankruptcy, you will need written approval from the court, via the bankruptcy trustee, in order to pursue a loan. In the meantime, repairing your credit score while saving money is the best course of action to prove your reliability to lenders and to prepare yourself financially to make the necessary down payment.

My name is Scott Grebner and I have been helping my clients realize their own personal real estate dreams. Real estate is a relationship-based business that works best when client relationships are built on trust and confidence. My goal is having clients be completely satisfied with the professional and caring service they have received.

The role of technology is rapidly changing how the real-estate market functions in this country today. Gerharter Realtors is embracing these new mediums of communication to better serve our customers. We have created our e-family to better place important information in your hands to help you with your housing needs. As a part of Gerharter Enterprises we have access to a broader range of additional services and resources to better assist you. Visit me at my Web Site, Blog, Facebook, Twitter, You Tube or Pinterest. Please check out our helpful resources on Sellers Tips, Buyers Tips, Foreclosure Tips, and Mortgage Tips. For a personal consultation please visit our Office.

It seems that the dream of past generations was to pay off a mortgage. The dream of today’s young families is to get one. I would love to hear from you, about your Real Estate Dreams and questions.

Email me at scott@gerharterrealtors.com.

FHA Loan Programs

By Daniel Duffield

FHA loans, while not as diverse as conventional loans, come in several different forms, each tailoring to a different sort of borrower. Visit Lender411’s comprehensive guide on FHA Loans vs Conventional Loans for in-depth information. Here is a list of the basic variations of FHA loans:

FHA Loan Program: Adjustable Rate

The FHA adjustable rate mortgage is an FHA-insured loan in which the interest rates can fluctuate, hence “adjustable.” These mortgages best serve low to moderate-income families buying their first homes. Through this type of loan, the Federal Housing Administration limits initial costs of interest rates and mortgage payments to make the loan more accessible and affordable. While interest rates may increase or decrease over time, you will receive at least 25 days of notice of any changes to your total monthly payment.

FHA Loan Program: Fixed Rate

Fixed rate FHA loans are FHA-insured loans in which interest rates remain static. These mortgages generally benefit borrowers who have not managed to accrue a large savings for the costs of the purchase such as down payments and closing fees. Since interest rates are not subject to change, fixed rate mortgages tend to be less risky than adjustable rate mortgages.

FHA Loan Program: Energy Efficient Mortgage

The Energy Efficient Mortgage program, or EEM, allows homeowners or potential homeowners to increase their homes’ energy efficiency through home improvements. This loan enables a borrower to acquire the necessary funds for this process without having to obtain a second loan in addition to a home loan. However, eligibility of these improvements requires that their total cost not exceed the total dollar value of the energy that will be saved during their useful lifetime, meaning that only profitable investments will be accepted.

Graduated Payment Mortgages

Graduated Payment Mortgages are loans which begin with cheaper monthly payments to principal and interest but incrementally increase each year for up to ten years. These mortgages best serve borrowers who have a low to moderate income while closing the loan but who expect their income to grow significantly over the course of the loan. Keep in mind that these mortgages cost more in interest over the course of the loan than mortgages with consistent payments.

Growing Equity Mortgages

Growing Equity Mortgages are similar to Graduated Payment Mortgages in that they also have small initial payments that gradually rise. Unlike Graduated Payment Mortgages, however, the additional money from increased payments applies directly to the loan principal and reduces the term of the mortgage. These loans also allow homeowners to schedule payment increases to additionally reduce the mortgage term. Growing Equity Mortgages tend to target first time homebuyers or young families who cannot afford the upfront and monthly costs of other mortgages.

FHA 203(k) Loan

The FHA 203(k) loan is a rehab loan, or a loan that provides the funding for home rehabilitation and improvement. This type of loan enables a borrower to essentially manage two loans in one: a home loan and a home equity loan. These loans best fit investors who are familiar with the lending process and are willing to take the risk of purchasing and fixing up foreclosed and/or damaged property.

Where to Find an approved FHA Lender Near You

If you are considering taking out an FHA loan, it is important to shop around to find the absolute best rates for your loan. Due to the large amounts of money in an FHA loan, small adjustments in interest rates can make a significant difference in the total cost of your loan.

My name is Scott Grebner and I have been helping my clients realize their own personal real estate dreams. Real estate is a relationship-based business that works best when client relationships are built on trust and confidence. My goal is having clients be completely satisfied with the professional and caring service they have received.

The role of technology is rapidly changing how the real-estate market functions in this country today. Gerharter Realtors is embracing these new mediums of communication to better serve our customers. We have created our e-family to better place important information in your hands to help you with your housing needs. As a part of Gerharter Enterprises we have access to a broader range of additional services and resources to better assist you. Visit me at my Web Site, Blog, Facebook, Twitter, You Tube or Pinterest. Please check out our helpful resources on Sellers Tips, Buyers Tips, Foreclosure Tips, and Mortgage Tips. For a personal consultation please visit our Office.

It seems that the dream of past generations was to pay off a mortgage. The dream of today’s young families is to get one. I would love to hear from you, about your Real Estate Dreams and questions.

Email me at scott@gerharterrealtors.com.

FHA Streamline Refinance

By Daniel Duffield

FHA streamline refinancing has many advantages over traditional FHA refinancing. If you want to refinance an FHA loan the usual way, you’ll have to wade through a seemingly endless sea of paperwork before closing your new loan. Credit checks, debt to income ratios, employment verification, and other common requirements eat up time and create stress and confusion. The FHA streamline refinance eliminates many of the complex steps involved, allowing you to get your new loan and your lower interest rates without delay.

What is an FHA Streamline Refinance?

An FHA streamline refinance is a unique type of refinance transaction available solely to borrowers with FHA-insured mortgages. The streamlined process essentially bypasses the difficult steps involved in securing an FHA loan from a lender, making it much simpler and quicker than traditional refinancing.

What are the advantages of FHA Streamline Refinancing?

No verification. Streamlined refinancing applications require no verifications of employment, income, or credit score. As a result, the process is relatively quick and convenient when compared to the lengthy process of borrowing FHA insured loans.

No Appraisal. The defining characteristic of an FHA streamline refinance is that it does not require an appraisal of property; instead it utilizes the original price of the property, greatly benefiting underwater homeowners who owe much more than the current worth of their homes.

What are the requirements of FHA Streamline Refinancing?

FHA-Insured Loan
Only borrowers with FHA-insured loans qualify for FHA streamline refinancing, however, borrowers with conventional mortgages may still opt for traditional FHA refinancing.

Payment History
In order to reduce its own risk, the Federal Housing Administration requires that homeowners who intend to use the program must have a spotless payment history for at least twelve months prior. Loans must be current at the closing date without any late payments for the previous year.

Waiting Period
The FHA requires that borrowers wait 210 days from the most recent closing date and make a minimum of 6 mortgage payments on their current FHA loan to qualify.

Costs and Fees
The FHA strictly forbids the increasing of a Streamline Refinance loan balance in order to pay associated loan fees. All costs must be paid by the borrower as cash at closing or fully credited by the loan officer.

Net Tangible Benefit
Finally, borrowers who apply for FHA streamline refinancing must demonstrate that the refinance will result in a Net Tangible Benefit, or a benefit which outweighs the cost of undergoing the refinance process. Essentially, borrowers must benefit from the refinancing process in some way. One example of a Net Tangible Benefit would be a borrower reducing the cost of the principal, interest, and mortgage insurance by 5% or more; because the borrower gains something from the transaction, this refinance would qualify.

Do I have to pay for mortgage insurance?

As with FHA-insured loans, FHA streamline refinancing requires borrowers to pay for mortgage insurance. Rates for FHA streamline refinancing differ depending on the date which the loan was endorsed. Loans older than June 1, 2009 are considered “grandfathered” and feature considerably lower rates than those endorsed after June 1, 2009.

What other refinance options are available with FHA-insured loans?

FHA Rate/Term Refinance. The FHA Rate/Term Refinance allows borrowers with a conventional fixed rate loan or an FHA adjustable rate mortgage to refinance into a fixed rate FHA mortgage. This type of refinancing best fits borrowers with conventional mortgages that have high interest rates; by switching to FHA fixed rate, these borrowers can decrease their interest rates and payments altogether.

Cash Out FHA Refinancing. Cash out refinancing allows the borrower to take out cash from a refinancing transaction. By definition, a cash out mortgage is any new mortgage with funds that are used to pay for anything other than a pre-existing first mortgage and the associated closing costs of the loan. Consider this option to obtain a new mortgage for more than the amount still owed on the original mortgage. However, the amount of cash that you will be able to withdraw cannot exceed 85% of the home’s appraised value.

Zero-Cost Refinancing. Zero-Cost FHA refinancing is a refinance transaction in which the expenses involved in securing the loan, such as upfront fees and closing costs, are included in the loan balance rather than paid at the time of closing the loan. This enables borrowers to close a loan even when they are unable to afford the associated fees. While immediately beneficial to some, adding these charges into the loan balance costs more in the long run, so depending on your financial standing, you should consider paying upfront when possible.

Non-FHA to FHA Refinancing. For borrowers whose current mortgage is not FHA-insured, refinancing into an FHA loan is entirely possible and can be quite beneficial. However, this process cannot be streamlined as with a pre-existing FHA mortgage and consequently requires the necessary paperwork involved in securing a standard FHA loan. Fortunately, FHA refinancing is still faster, simpler, and more convenient than conventional mortgage refinancing, and credit requirements do not factor in as heavily.

My name is Scott Grebner and I have been helping my clients realize their own personal real estate dreams. Real estate is a relationship-based business that works best when client relationships are built on trust and confidence. My goal is having clients be completely satisfied with the professional and caring service they have received.

The role of technology is rapidly changing how the real-estate market functions in this country today. Gerharter Realtors is embracing these new mediums of communication to better serve our customers. We have created our e-family to better place important information in your hands to help you with your housing needs. As a part of Gerharter Enterprises we have access to a broader range of additional services and resources to better assist you. Visit me at my Web Site, Blog, Facebook, Twitter, You Tube or Pinterest. Please check out our helpful resources on Sellers Tips, Buyers Tips, Foreclosure Tips, and Mortgage Tips. For a personal consultation please visit our Office.

It seems that the dream of past generations was to pay off a mortgage. The dream of today’s young families is to get one. I would love to hear from you, about your Real Estate Dreams and questions.

Email me at scott@gerharterrealtors.com.
 

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