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Saturday, March 30, 2013

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.

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