FHA qualifying change October 4th 2010

FHA qualifying changeThe housing industry and the mortgage side of the housing industry in particular is seeing a ton of changes.

Available loan programs have dropped down to just a few with no new programs in the foreseeable future, no one really knows what home prices will do, rates are at just about their lowest point in recorded history all the while the qualifying guidelines are becoming more and more strict.

Qualifying guidelines and the tightening up of those guidelines have been the major limiting factor in keeping prospective buyers from realizing their dream of owning a home.

It is my opinion that these guidelines did need to be tightened up as I feel the seeming lack of guidelines a few years ago allowed loans to be made in situations where the borrower really did not have the wherewithal to pay the loan back.

Of course the borrowers were done no service by the plethora of loan agents who didn’t know their head from their big toe and couldn’t or would not explain to the borrowers what the loan they were getting into really meant in the long run.

Some of what we are seeing presently with the guidelines is kind of a kneejerk reaction to the that previous leniency .

All that being said here is another one of the changes that will be coming next week with many of the lenders offering the FHA product.

The minimum fico score accepted by many lenders will now be going up from 620 to 640.

20 points on your credit score can be a tough hill to climb but it is definitely not insurmountable.

It can take a few months to get that score up to where it needs to be if you’re not already there. Don’t let something like this keep you from pursuing your dream of owning a home though.

When I talk to perspective borrowers I always let them know that a pre-approval is the first step you should take.

If you make a offer on a home before you have the pre-approval done you are essentially putting the cart before the horse. What happens if your offer gets accepted and then you go to the bank and find that you don’t actually qualify for one reason or another.

My role in the pre-approval process is hopefully to tell you right away that yes you are pre-approved. If however in putting the pre-approval together I find that you are not qualified my role changes and then you and I will sit down and work out a game plan to get you to where you need to be.

After that we will get you connected with a realtor who shares my passion for educating you and steering you in the right direction.

It can’t be said enough, working with a great team is the best way to see that you are successful in your bid to purchase the home of your dreams.

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5 Responses to FHA qualifying change October 4th 2010

  1. Jenny Neal March 4, 2012 at 5:23 am #

    I am three years into a chapter 13 bankrupcy. I have a credit score of 649. I have 24 months left until discharge. I have been saving to get my 20% down payment however, with this new information that states that I would need to be discharged for one year, my question would be if it would be wiser to try to pay off the bankrupcy so that I could qualify for an FHA loan and speed up the process? As it stands, I’d be three years out on making application for a home.

    • Legacy Content March 4, 2012 at 10:11 am #

      Jenny, I would consult with your bankruptcy attorney to identify your opportunities there but that sounds like a very good plan. You would indeed be eligible to buy using FHA 1 year after the discharge as long as you continue to make all your payments on time. Was there real estate included in your Chapter 13? If so, that’s changes things.

  2. Irene November 21, 2010 at 7:26 pm #

    In your blog you state that “The minimum fico score accepted by many lenders will now be going up from 620 to 640.” Does that mean that some lenders will consider 620, and its just a guideline that is optional to the lender? I was preapproved for a loan on Oct 19th and my credit score was 630 so I don’t know if i should contact my lender in regards to that??

  3. leslye ross November 6, 2010 at 8:42 pm #

    my question has to do with qualifying. It will be 2 years since my bankrupcy was finalized, and I understand at that time I might be able to get another loan? My credit is in the high 600s – low 700s. Should I try to prequalify now, even though its less than 2 years since the discharge? I am also looking at down payment assistance/closing cost assistance and am reading what you have to say on this website. I might qualify for the sacramento low income/single parent assistance or I might make a little too much but am still a single parent, although son is 18, he’s still in high school. Would that still count? Any tips? thank you. Leslye ross

    • Legacy Content November 6, 2010 at 10:45 pm #

      Hi Leslye,
      Thank you for the question. Your bankruptcy must be discharged for 24 months to use a FHA loan to purchase a home. If you are close to that, it will not hurt to get pre-qualified now to make sure there are no other challenges or steps that you might need to take before being able to qualify.

      Yes, there are several programs that can help with down payment and closing costs, we can look into those after you are approved for the first home loan. All of those programs have different income and/or loan amount requirements.

      I do encourage you to begin the process. If you would like, send me an email at [Broadview]s@broadviewhome loancorp.com with the best time and number to reach you and we can talk a little more about your current situation, and what steps, if any, we would need to take to get you in a position to qualify once your bankruptcy hits 24 months.