FHA Loans?

[Anonymous]

How hard are FHA loans to get? And do they have drawbacks?

[Anonymous]

It depends. Main thing FHA wants is no lates in the last 12 months, and they look hard at your DTI. Usually 3 percent down. They tend not to stare at FICO scores too much. You also need a broker or lender who's FHA certified. If they cannot do FHA, then you're doing yourself a disservice. If they cannot do FHA, they'll steer you to sometime when FHA might be your best option.

[tex2step]

FHA does not look too closely at yout credit reporty. They look more at your payment history in the last 2 to 3 years. Doesn't matter if you have a low credit score, as long as you show you are paying on time in the last 2-3 years. Second, your loan (PMI, Insurances, taxes, etc) should not be more than something like 40% of your total income- if you're utilizing too much credit, you may have to pay down a card or two. They don't seem to do any of this fancy financing the conventionals do. It's an interest rate, may have to pay points, and such.. as a result, you might get different rates from different FHA lenders- so shop around. Finally.. and most importantly I feel, the house must appraise using an FHA approved appraiser. They generally use cost and market appraisal values. Conventional loans generally use (at least in Texas) the income approach to try and get the house to appraise higher resuling in a better Loan to Value and  reducing the risk of defualt on paper. The income approach generally produces higher home values. FHA basically looks at a few comps in the area.... then they look at the cost in today's dollars to rebuild the home and that's the value assigned. This generally prices out FHA borrowers from the 'hot' markets or the 'up and coming' areas because it's more difficult to get the house to appraise.

One last thing.. money in the bank. Age it for three months with any conventional lender. However, one of the bright spots on FHA is that you can get your closing cost money gifted to you and all you need is a letter. However, conventional will want to source any new 'large amount' in your account-- generally I found it was about $2000.00 in your account in a lump sum needs to be traced. So an amazing credit score might not guarantee you wil be able to close if you don't have a good amount of money in reserves. 401k counts as reserves, so if you have that, you might be ok for reserves for 6 months of taxes, etc... but probably will not count for closing costs. So for folks with good recent payment history and little money in the bank, FHA is the least stressful loan to get. Just be advised that you may not get to live in the hot and up and coming areas as those are hard to appraise using FHA methods. I hope this helps. I went through several lenders recently including FHA  (mid 08/2007). 

I hope this helps!

[Anonymous]

You said: one of the bright spots on FHA is that you can get your closing cost money gifted to you and all you need is a letter.

Do I write the letter or someone else?

[tex2step]

I think the person that 'gifted' the money has to write it and you both sign it. I'm not too sure to be honest. Fortunately, I had enough to cover my closing costs in my bank account and have a 401K that they used for my reserves. If possible, when writing out a sales contract, push for the seller to pay between $2000-$3000 of your closing costs instead of trying to lower the price of the home by that amount.  $3000 over 30 years does not do much to your monthly payment... but it may make a world of difference to FHA when calculating your money on hand.

Back to your question, I do know that there is a statement that has to be filed stating that under perjury of law, this money is a gift that does not need to be repaid. So I would assume that you and the person giving you the money write a letter and then fill out a form of some sort. That's the way I understood it as the lender was going over all my options.

FHA will generally do a loan up to 97% of the sales price. So if you are thinking of an FHA loan, you also need to be aware that the loan to income (or debt to income I should say) varies by state to state- but 41% seems to be the norm in most areas.

One thing I also found is that you have 15 days to shop around for a mortgage. So from the first mortgage app you put in.. you can have your credit checked by mortgage companies and it will only ding your credit once. I put in an app with about 8 different banks (Including FHA lenders) ,and my credit barely took a hit- until the mortgage showed up on the credit report!!!

Good luck! I switched lenders mid way, (went from conv to FHA) so I've got some recent experience with this.

[Anonymous]

to martgage shop within 15 days do i have to do anything special or just fill out credit apps like normal?

[Anonymous]

I applied for a FHA today through Bank of America they are wanting to charge 50.00 for a final approval is this a charge FHA requires?do all lenders charge this?

[Anonymous]

Not positive, but I believe the de-duplication window for mortgage shopping is 45 days.

Barry, Tuscani, Raine?

[Anonymous]

Who care!!! I think that B of A has the best rates right now and I do NOT work for them. If I were you I would give them that 50 bucks. Once B of A gives you a quote you can go shop around but I know they are VERY HARD to beat. Good Luck!

[tex2step]

I got several rate quotes as well, but none asked me for any $ to lock. Lending Tree did but they waived it-- but I ended up nixing them and going FHA even after my rate was locked. $50.00 is not a lot, but there are many lenders who do not charge for this.

I also did find out that if you're going to claim money for closing costs, they will also require a cancelled check as well.

I stand corrected on the time frame you have to shop around. I was going with what a couple of loan officers told me (probably to prevent me from shopping around too much, but I did anyway):

Check these sites out as they state 30 days: 

 http://www.consumersunion.org/other/mh/credit.htm

http://www.mortgagequotes.com/Mortgage_and_Finance/MAI_Article/Happy_Credit/