FHA http://www.wisebread.com/taxonomy/term/9900/all en-US 3 Terrible Things Foreclosure Does to Your Credit http://www.wisebread.com/3-terrible-things-foreclosure-does-to-your-credit <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/3-terrible-things-foreclosure-does-to-your-credit" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/house_foreclosure_sign_000016301916.jpg" alt="Learning what foreclosure does to your credit" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You're about to lose your home to foreclosure. Will it destroy your credit? Unfortunately, yes &mdash; your three-digit FICO credit score will plummet following, and leading up to, a foreclosure.</p> <p>There is hope, though. Even after a foreclosure, you <em>can </em>rebuild your credit score. You'll even be able to qualify for a mortgage loan again one day. Just be prepared to wait.</p> <p>&quot;If there is a bright side to foreclosure, it is that credit scores will recover with time and reestablishing a good payment history,&quot; said J.D. Crowe, president of Lawrenceville, Georgia-based Southeast Mortgage and president of the Mortgage Bankers Association of Georgia. &quot;The most important thing for people to know about a foreclosure absolutely, without question, is to always pay everything on time, especially a mortgage payment.&quot;</p> <h2>The Credit Score Drop</h2> <p>Lenders of all kinds rely heavily on your FICO credit score to determine whether they should approve you for a loan, and at what interest rate. If your FICO score is too low, lenders will hesitate to loan you money. When they do, they'll charge you higher interest rates to make up for the risk.</p> <p>Today, most lenders consider a FICO score of 740 or higher to be a good one, indicating a borrower with a history of paying bills on time and not running up too much credit card debt.</p> <p>How far will your FICO score drop if you suffer a foreclosure? There's no one single answer. The actual fall your score takes depends on what your score was before you went through foreclosure, how many missed mortgage payments you accumulated, and whether you had any other missed payments on your credit reports.</p> <p>In general, though, a foreclosure will drop your credit score by at least 100 points &mdash; usually more. And typically, consumers' credit scores have already taken a hit before foreclosure. That's because they usually miss several mortgage payments before lenders start the foreclosure process.</p> <p>Crowe estimates that depending on your individual circumstances, your FICO credit score will fall by 100 to 300 points. If you started with a solid 750 score, it could fall to the low 500s by the time your foreclosure closes.</p> <p>That foreclosure will remain on your credit report for seven years. This means that borrowers will see it every time they pull your credit during this period.</p> <h2>Waiting for Another Mortgage</h2> <p>Don't plan on applying for a new mortgage anytime soon after a foreclosure. First, your credit score will probably be too low. Secondly, mortgage lenders impose mandatory waiting periods for borrowers after a foreclosure.</p> <p>If you want to apply for a conventional mortgage loan &mdash; one not insured by the federal government &mdash; you'll have to wait at least seven years after a foreclosure. You might be able to qualify for a conventional loan after just three years if you can prove extenuating circumstances led to your foreclosure, such as a job loss, illness, or divorce. However, Crowe said that it is very rare for lenders to shorten the mandatory waiting period no matter what you list as the cause of your foreclosure.</p> <p>If you want to apply for a loan insured by the Federal Housing Administration, better known as an FHA loan, you'll have to wait three years from your foreclosure. However, if you can prove that a job loss led to your foreclosure, you will only have to wait one year to apply for a new FHA loan. You will have to prove, though, that the job loss reduced your regular income by at least 20%. You'll also have to provide documents showing that your income has since returned to its previous level or higher.</p> <p>You can apply for a loan insured by the U.S. Department of Veterans Affairs as soon as two years after your foreclosure. But you do have to meet the eligibility requirements to qualify for a VA loan.</p> <h2>Rebuilding Your Credit</h2> <p>Once your score has fallen, it's time to start rebuilding. You can do this by paying all of your bills on time and cutting down on credit card debt. Don't close any unused credit cards, though. Having available credit that you aren't using actually <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score">improves your credit score</a>.</p> <p>Over time, your score will slowly improve. And lenders will care less about your foreclosure as the years move on, as long as you don't make any other late or missed payments.</p> <p>Eventually, and usually before the seven-year wait for foreclosures to fall off your credit reports, you will again be able to qualify for auto loans, credit cards, and other loans as long as you show that you are now managing your finances responsibly and paying your bills on time.</p> <p>See also: <a href="http://www.wisebread.com/what-are-secured-credit-cards?ref=seealso">Sign Up for a Secured Credit Card to Raise Your Score</a></p> <p>&quot;If you have had a foreclosure, accept responsibility, pick yourself up, and move on with your life,&quot; Crowe said. &quot;It is not the end of the world. What you must do from this point forward is to pay every creditor on time.&quot;</p> <p><em>Have you gone through a foreclosure? What steps did you take to repair your credit?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/3-terrible-things-foreclosure-does-to-your-credit">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-money-moves-to-make-for-tomorrows-mortgage">6 Money Moves to Make for Tomorrow&#039;s Mortgage</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-whats-included-in-a-homes-closing-costs">Here&#039;s What&#039;s Included in a Home&#039;s Closing Costs</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/when-it-makes-sense-to-apply-for-a-mortgage-loan-without-your-spouse">When It Makes Sense to Apply for a Mortgage Loan Without Your Spouse</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-things-lenders-look-for-in-a-loan-application">5 Things Lenders Look For in a Loan Application</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-an-fha-home-loan-right-for-you">Is an FHA Home Loan Right for You?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing credit reports credit scores FHA fico foreclosures loans mortgages Mon, 22 Feb 2016 10:30:22 +0000 Dan Rafter 1656523 at http://www.wisebread.com 6 Important Things You Need to Know About the Housing Market in 2016 http://www.wisebread.com/6-important-things-you-need-to-know-about-the-housing-market-in-2016 <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-important-things-you-need-to-know-about-the-housing-market-in-2016" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/housing_market_000074855705.jpg" alt="Learning important changes coming to housing market in 2016" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Buying a home is still part of the American dream.</p> <p>According to a survey from Trulia, 75% of Americans dream of owning a home, up 1% from 2015. This dream is even more pressing among Millennials because 80% of those surveyed would like to buy a home &mdash; and 31% would like to do so by 2018.</p> <p>Whether you're looking to buy a home this year or already own one, there are important factors that will affect your investment. Here are the six important things you need to know about the housing market in 2016.</p> <h2>1. Mortgage Rates Are Staying Low (For Now!)</h2> <p>The Fed's December 2015 interest rate hike had many consumers worried that rock-bottom mortgage rates would finally come to an end. However, the economic events of the first two weeks of 2016 show that low mortgage rates will stick around for a bit longer.</p> <p>Given the lackluster performance of the stock market, many investors are buying bonds and driving down the yields of these investment vehicles. This is great news for those looking for a home loan, because the interest rates on 30-year mortgage loans are highly correlated with the yield of the U.S. Treasury 10-year bond. According to data from the Federal Reserve Bank of St. Louis, the average 30-year fixed rate mortgage average in the U.S. was <a href="https://research.stlouisfed.org/fred2/series/MORTGAGE30US">3.97% on January 7, 2016</a>, down from 4.1% in December 31, 2015.</p> <h2>2. HARP Refinance Deadline Receives Extension</h2> <p>Many experts expect mortgage interest rates to increase further down the road. Those mortgage holders that haven't been able to refinance to a lower rate yet should think about doing so this year &mdash; especially homeowners that are underwater on their mortgages.</p> <p>As of January 2015, about 700,000 borrowers who owed more than their homes were worth were <a href="http://www.nytimes.com/2015/01/24/your-money/700000-homeowners-could-still-benefit-from-us-harp-refinancing-program.html?_r=0">still eligible to refinance</a> their loans through the HARP program from the Federal Housing Finance Agency (FHFA). HARP was originally set to expire at the end of 2015, but it was extended for an additional year, until the end of 2016.</p> <p>Nearly 3.3 million Americans have benefited from a HARP refinance to lower their monthly payments on their mortgages. The five basic requirements to qualify for a HARP refinance are:</p> <ul> <li>Loan was originated on or before May 31, 2009.<br /> &nbsp;</li> <li>Property is a primary residence, one-unit second home, or one- to four-unit investment property.<br /> &nbsp;</li> <li>Loan is owned by Freddie Mac or Fannie Mae.<br /> &nbsp;</li> <li>Current loan-to-value ratio must be greater than 80%.<br /> &nbsp;</li> <li>Borrower is current on the mortgage, with no over-30-day late payments in the last six months and no more than one in the past 12 months.</li> </ul> <p>There are still close to 430,000 HARP-eligible loans out there and you can check the <a href="http://harp.gov/Default.aspx?Page=363">eligibility of loans</a> by zip code.</p> <h2>3. Home Prices Are Rising Less Than in Previous Years</h2> <p>One of the <a href="http://www.wisebread.com/8-necessities-that-will-be-cheaper-in-2016">necessities that will be cheaper in 2016</a> is the single-family home. In 2016, the national average price for a single-family home is expected to be 3% higher than last year, a much slower rate of growth than 2015's 5% increase.</p> <p>However, some markets will experience bigger price bumps, such as Sacramento, California with an expected 15% increase, and other markets will experience smaller price bumps, such as Houston, Texas with an expected 1.1% increase.</p> <h2>4. Rent Prices Are Increasing Faster</h2> <p>On the other hand, rent prices are expected to increase sharply. In the third quarter of 2015, U.S. home buyers were spending <a href="http://www.zillow.com/research/q3-2015-mortgage-rent-affordability-11197/">15% of their monthly income</a> on the mortgage payment of a typical home, while U.S. renters were spending 30% of their monthly income on the rent payment of a median-valued property.</p> <p>Higher rent prices will continue to be norm in 2016. According to a survey of more than 500 large U.S. property managers, <a href="http://www.rent.com/blog/2015-rental-market-report/">rental inventory</a> is at the lowest level in over 20 years.</p> <p>A smaller inventory of available units for rent enables landlords to demand higher prices from renters. Of the surveyed property managers, 55% reported to be &quot;less likely to offer concessions or lower rents to fill vacancies&quot; and 68% of them expected to continue raising their rental rates in 2016 by an average of 8%.</p> <h2>5. New FHA Loan Limits Take Effect</h2> <p>On December 9, 2015, the Federal Housing Administration (FHA) announced its new schedule of <a href="http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2015/HUDNo_15-156">loan limits for 2016</a>. FHA home loans allow homebuyers to access financing with a minimum 3.5% down payment of the market value of the property, among other requirements.</p> <p>Given the changes to median house prices in certain metropolitan areas, in 2016 the maximum FHA loan limit is higher in <a href="http://portal.hud.gov/hudportal/documents/huddoc?id=limitsincreasedcy15_cy16.pdf">188 counties</a>. However, the maximum nationwide FHA loan limit remains at $625,500 (here is a <a href="http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/lender/origination/mortgage_limits">list of areas</a> that are at the ceiling or that are considered &quot;high cost.&quot;)</p> <p>On the other hand, in 2016 the minimum FHA loan limit doesn't decrease for any areas in the country.</p> <h2>6. Fannie Mae Loosens Some Requirements</h2> <p>The Federal National Mortgage Association (FNMA), better known as Fannie Mae, is giving Americans a break in 2016. Through its new <a href="https://www.fanniemae.com/singlefamily/homeready">HomeReady mortgage program</a>, Fannie Mae aims to broaden access to home financing to credit-worthy low-to-moderate income borrowers.</p> <p>Some of the <a href="https://www.fanniemae.com/content/fact_sheet/homeready-overview.pdf">loosened requirements</a> from Fannie Mae include:</p> <ul> <li>Borrower isn't required to be a first-time homebuyer;<br /> &nbsp;</li> <li>Down payment can be as low as 3% of property's market value;<br /> &nbsp;</li> <li>Gifts, grants, and cash-on-hand are acceptable funds to cover downpayment and closing costs;<br /> &nbsp;</li> <li>Nontraditional credit is allowed;<br /> &nbsp;</li> <li>Income from non-borrower household members can be counted as part of the debt-to-income ratio of the borrower; and<br /> &nbsp;</li> <li>Underwriting process includes additional flexibilities.</li> </ul> <p>To learn more details about the HomeReady program, call 1-800-7FANNIE (1-800-732-6643) or visit <a href="http://www.fanniemae.com">FannieMae.com</a>.</p> <p><em>Do you expect 2016 to be better for the housing market &mdash; and your plans of owning a home?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/6-important-things-you-need-to-know-about-the-housing-market-in-2016">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-terrible-things-foreclosure-does-to-your-credit">3 Terrible Things Foreclosure Does to Your Credit</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/whats-faster-for-mortgage-payoff-100-month-extra-or-1-payment-year-extra">What&#039;s Faster for Mortgage Payoff: $100/Month Extra or 1 Payment/Year Extra?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-what-to-do-if-you-cant-afford-your-mortgage-payment">Here&#039;s What to Do If You Can&#039;t Afford Your Mortgage Payment</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-simple-ways-to-live-rent-free">5 Simple Ways to Live Rent-Free</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-whats-included-in-a-homes-closing-costs">Here&#039;s What&#039;s Included in a Home&#039;s Closing Costs</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing fannie mae FHA HARP housing market loans mortgage rates rent Thu, 21 Jan 2016 14:00:03 +0000 Damian Davila 1642416 at http://www.wisebread.com 5 Reasons Why 2015 is the Year to Buy a House http://www.wisebread.com/5-reasons-why-2015-is-the-year-to-buy-a-house <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-reasons-why-2015-is-the-year-to-buy-a-house" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_new_homeowners_000051793940.jpg" alt="Couple learning why 2015 is the year to buy a house" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you've been dragging your feet or going back and forth about buying a house, 2015 might be the year to move forward with a home purchase. <a href="http://www.wisebread.com/5-things-millennials-can-do-to-buy-a-house-within-the-next-decade">Buying a home</a> has become harder over the past six or seven years &mdash; we can thank the mortgage/housing meltdown for this. Lenders tightened their guidelines with regard to credit and income, which made it difficult for many to qualify for mortgages. Some would-be buyers had no choice but to delay buying until later.</p> <p>Well, later has arrived. Due to recent changes in mortgage loan products and shifts in housing markets across the country, this might be one of the best years to jump into homeownership since 2008.</p> <h2>1. Killer Interest Rates</h2> <p>Low mortgage rates were common in the early 2000's, but after the mortgage crisis, rates increased to around 6% or 7%. These higher rates made it harder for many to purchase, but rates dropped again in 2012 to the 3%&ndash;4% range and breathed life back into the lending industry. In mid-2014, some mortgage experts predicted that interest rates would rise sharply in 2015, but new data suggests <a href="http://www.bankrate.com/finance/mortgages/mortgage-rates-forecast.aspx">rates will remain low</a> for the remainder of this year. If you want to get in while rates are low, now's the time, especially since there's no way to know whether rates will rise in 2016.</p> <h2>2. Cheaper Mortgage Insurance Premiums (FHA)</h2> <p>You can purchase a home without a 20% down payment, but you'll have to pay mortgage insurance. Lenders require this type of insurance if you don't have at least 20% equity. Mortgage insurance protects the bank in case you default, and it's included in your monthly mortgage payment. It opens the door to ownership if you don't have a large cash reserve, but unfortunately, you'll also pay more monthly.</p> <p>There's good news if you're thinking about getting an FHA home loan. As of January 2015, the Federal Housing Administration <a href="http://money.cnn.com/2015/01/07/real_estate/fha-mortgage-insurance/">reduced their mortgage insurance premiums</a> from 1.35% to 0.85%. This 0.50% reduction means it'll cost less to have an FHA mortgage. In fact, an FHA home loan may be cheaper than getting a conventional mortgage. Ask your mortgage lender for an FHA and a conventional mortgage quote to compare the savings. According to the White House, &quot;The lowered premiums will help more than 800,000 homeowners save on their monthly mortgage costs and enable up to 250,000 new homebuyers to purchase a home.&nbsp;&quot;</p> <h2>3. Lower Down Payments for Conventional Mortgages</h2> <p>FHA home loans isn't the only mortgage program seeing changes in 2015. For the past several years, conventional mortgage lenders required at least a 5% down payment from buyers. If you were purchasing a $300,000 house, this meant coming up with $15,000 out-of-pocket. However, Fannie Mae and Freddie Mac announced the return of the 3% down payment in 2015 &mdash; a tremendous savings that will help many first-time homebuyers purchase much sooner. Instead of struggling to save $15,000 to purchase a $300,000 house, you can get the keys to a new place with a $9,000 down payment.</p> <h2>4. Increasing Home Values</h2> <p>Rising home prices can be a good or bad thing, depending on which end you're on. If you're buying, higher prices mean you'll pay more for a property than if you had purchased last year. And as a seller, rising home values let you sell at a higher price, which might be the ticket if you're having difficulty drumming up a down payment for a new place. Down payments are a major stumbling block for people hoping to purchase a house. If you already own a house, increasing property values mean you're able to walk away with a bigger profit, which you can use to buy the next place.</p> <h2>5. Rent Isn't Getting Any Cheaper</h2> <p>Some people prefer renting because it gives them flexibility and they don't have to worry about home maintenance or repair. But at the same time, rental prices are unpredictable. Landlords can increase rental rates every year, and before you know it, you're paying way more than you started out paying. Buying, on the other hand, results in predictable monthly payments (if you have a fixed-rate), and you don't have to worry about a mortgage lender jacking up your rate. Because rental increases are inevitable, buying a house might be cheaper than renting in the long run.</p> <p><em>Are you planning on buying a house this year? Why or why not?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/5-reasons-why-2015-is-the-year-to-buy-a-house">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/watch-out-for-these-5-last-minute-home-buying-costs">Watch Out for These 5 Last Minute Home Buying Costs</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-home-buying-habits-we-can-learn-from-millennials">4 Home-Buying Habits We Can Learn From Millennials</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-things-to-consider-before-buying-a-home-when-youre-single">5 Things to Consider Before Buying a Home When You&#039;re Single</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/ask-yourself-these-5-questions-before-buying-a-home">Ask Yourself These 5 Questions Before Buying a Home</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/yes-you-need-home-title-insurance-heres-why">Yes, You Need Home Title Insurance — Here&#039;s Why</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing FHA homeownership mortgages pmi savings Fri, 29 May 2015 17:00:09 +0000 Mikey Rox 1433839 at http://www.wisebread.com FHA Home Loans: You Can Buy a Home Even If Your Finances Aren't Perfect http://www.wisebread.com/fha-home-loans-you-can-buy-a-home-even-if-your-finances-arent-perfect <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/fha-home-loans-you-can-buy-a-home-even-if-your-finances-arent-perfect" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/house-3624777-small.jpg" alt="house" title="house" class="imagecache imagecache-250w" width="250" height="166" /></a> </div> </div> </div> <p>If you have marginal credit, a moderate income, and little money for a down payment, you can still buy a house with the help of an FHA home loan. Yes, even after the housing boom and crash.</p> <p>Home buyers can obtain FHA mortgages, which are insured by the Federal Housing Administration but made by private government-approved lenders, with a down payment as little 3.5% of the home's purchase price. (See also: <a target="_blank" href="http://www.wisebread.com/buying-a-home-without-a-20-down-payment">Buying a Home Without the Money</a>)</p> <p>FHA home loans can be used to buy single-family homes and duplexes, triplexes, and four-unit homes, condominiums, cooperatives, and manufactured homes. Unlike other home loan programs, the down payment funds can come from a gift from a relative, employer, or charity.</p> <p>They can be used to buy single-family homes for up to $417,000 as of 2013, but the limits are higher, up to $729,750, in high-priced counties, areas that cover much of coastal California the Northeast. To find price limits for your county, visit the FHA's <a target="_blank" href="https://entp.hud.gov/idapp/html/hicostlook.cfm">mortgage limits page</a>.</p> <p>When subprime lending disappeared with the real estate market tumble, FHA home loan programs became the only alternative for borrowers with imperfect credit or low down payments. FHA mortgage standards have tightened recently and may become more stringent as the agency deals with more defaulting loans. Nevertheless, FHA loans are still the best option for some borrowers.</p> <h2>Easier on Credit Scores</h2> <p>Credit score requirements for FHA mortgages are much more relaxed than conventional loans. For that reason, FHA loans may be the only option for home buyers with spotty credit.</p> <p>Minimum credit scores can be complicated because they <a target="_blank" href="http://www.wisebread.com/the-four-cs-of-applying-for-and-managing-your-credit">can depend on different factors</a>, such as the amount of equity the homeowner has in the property.</p> <p>In addition, lenders may have their own credit requirements on top of FHA rules, but they're still likely to be more relaxed since the loans are government insured.</p> <p>The FHA's rules can change over time. For instance, the agency recently started requiring lenders to manually underwrite loan applications from borrowers with credit scores under 620 and total debt-to-income ratios over 43%. That means those with poor credit will need compensating factors, such as large bank accounts, to win approvals. The agency also increased the minimum down payment for loans over $612,500 to 5%.</p> <h2>Borrowers Pay Mortgage Insurance Premiums</h2> <p>It's important to understand mortgage insurance premiums, or MIPs, the FHA equivalent of private mortgage insurance. Unless they put 20% or more down, home buyers pay monthly mortgage insurance that protects the lender if the homeowner defaults.</p> <p>In addition to the monthly MIP, borrowers pay an upfront MIP of 1.75% of the loan amount. The good news is that the upfront premium, as well as other loan closing costs, can be wrapped into the mortgage and repaid over time.</p> <p>The annual premium is currently 1.35% of the loan balance and 1.3% for borrowers putting 5% or more down.</p> <p>Until recently, homeowners were able to dispense with the annual premium when their loan balance fell to 78% of the original loan balance. However, as of June 3, new borrowers will pay the premium for the life of the loan or until they sell the house and move or refinance into a new mortgage.</p> <h2>Mortgage Refinancing and Funds for Fixer-Uppers</h2> <p>Besides helping home buyers, FHA programs are available to help homeowners refinance into today&rsquo;s current low mortgage rates, even if they have little or no home equity, lower credit scores, or low or moderate income.</p> <p>Seniors can use FHA <a target="_blank" href="http://www.wisebread.com/reverse-mortgages-the-best-way-to-eat-your-home">reverse mortgages to cash out</a> equity from their homes without having to make monthly payments, and borrowers can use an FHA home improvement loan to purchase and <a target="_blank" href="http://www.wisebread.com/energy-efficient-mortgages-borrowing-more-to-save">renovate a home</a>.</p> <p>With the FHA 203(k) home buyers can purchase a home with a single mortgage with the FHA home improvement loan that releases funds from an escrow account as home improvement work proceeds. Homeowners can also use an FHA home improvement loan to refinance their mortgage and simultaneously finance home improvement work.</p> <p><em>Have you taken advantage of low interest rates or the FHA to buy or refinance a home recently?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/michael-kling">Michael Kling</a> of <a href="http://www.wisebread.com/fha-home-loans-you-can-buy-a-home-even-if-your-finances-arent-perfect">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-ensure-you-get-the-home-loan-you-want">How to Ensure You Get the Home Loan You Want</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-terrible-things-foreclosure-does-to-your-credit">3 Terrible Things Foreclosure Does to Your Credit</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/five-reasons-not-to-apply-for-a-loan-modification-in-the-home-affordable-modification-program-hamp">5 Reasons Not to Apply for a Loan Modification in the Home Affordable Modification Program (HAMP)</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-skip-a-mortgage-payment-to-get-a-banks-attention">Should you skip a mortgage payment to get a bank&#039;s attention?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-what-to-do-if-you-cant-afford-your-mortgage-payment">Here&#039;s What to Do If You Can&#039;t Afford Your Mortgage Payment</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing credit scores FHA home loan mortgage Thu, 09 May 2013 09:48:36 +0000 Michael Kling 973599 at http://www.wisebread.com Should Conforming Loan Limits Be Increased? http://www.wisebread.com/should-conforming-loan-limits-be-increased-0 <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/should-conforming-loan-limits-be-increased-0" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/bigstock_Hispanic_Family_In_Front_Of_Th_6068664.jpg" alt="Family with house they just bought" title="Family with house they just bought" class="imagecache imagecache-250w" width="250" height="167" /></a> </div> </div> </div> <p>On October 1st, 2011, the conforming loan limit for loans backed by the FHA, Fannie Mae, and Freddie Mac fell back down to the levels they were at before 2008. Less than a month later, the <a href="http://www.businessweek.com/news/2011-10-21/senate-adopts-measure-to-increase-fannie-freddie-loan-limits.html">Senate has passed an extension</a> of the law that raised those limits. Now the bill is going to the House for approval. Here is how it may affect you. (See also: <a href="http://www.wisebread.com/buying-first-home/home-loans">Guide to Home Loans</a>)</p> <p>First of all, let me explain what a conforming loan is. Basically, a loan is &quot;conforming&quot; if it is smaller than the limit that the FHA, Fannie Mae, or Freddie Mac set. Conforming loans can be purchased by these agencies, so these loans are more liquid, and borrowers with conforming loans qualify for the best mortgage rates. If a loan is larger than that limit, then it would be a &quot;jumbo loan,&quot; and the interest rate is generally a percent or more higher than a conforming loan. Right now over 90% of new home loans are backed by FHA, Fannie Mae, or Freddie Mac, so new house purchasers should know that if their loans are larger than the conforming loan amount, they would be more expensive and less likely to be funded.</p> <p>Fannie Mae and Freddie Mac currently have a conforming loan limit of $417,000 in most areas, and a maximum of $625,500 in high-cost areas for a single-unit residence. FHA loans currently have a conforming loan limit of 95% of the median home price in an area or $625,500, whichever is less. In 2008, the Housing and Economic Recovery Act raised these limits significantly. The maximum loan amount for all the agencies was as high as $729,000, and the FHA loan limit was raised from 95% of the median home price to 125% of the median home price. Basically, now the lawmakers want the loan limits to be back to the limits under the 2008 law.</p> <p>This loan limit issue affects FHA borrowers the most, since the difference in the loan limit in many areas changed more than 30%. FHA buyers typically only bring 3.5% of the home cost to their down payment, so basically the loan limit is the maximum price of the house they are purchasing. The good news for today's buyers is that housing prices have already come down more than 30% since 2008 in many areas, so the change in limit might not be a big deal because many houses are just plain more affordable.</p> <p>The loan limit issue also affects upper-middle-class buyers in high-cost areas. Here in the San Francisco Bay area, there are many upper-middle-class families who look for very basic two-to-three bedroom houses that cost more than $800,000. For these families, they may have to lower their price points by $100,000 or pay thousands of dollars more every year.</p> <p>Personally, I believe that the government should not encourage more debt by raising the limit. If you look at a <a href="http://en.wikipedia.org/wiki/Conforming_loan#Conforming_Loan_Limits">history of the conforming loan limit</a>, then you will see that it was raised drastically during the housing bubble. If large government-backed <a href="http://www.wisebread.com/6-great-reasons-for-paying-off-the-mortgage-on-your-home">mortgages</a> were not so easy to come by, then people might have bought cheaper homes, and perhaps we would not be in the situation we are in right now. I actually think that these loan limits should be decreased so that the private markets will have to shoulder more loans and more than 90% of the mortgage market is not backed by American taxpayers.</p> <p><em>What do you think? Do you want the loan limits to go back to the 2008 limits? </em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/xin-lu">Xin Lu</a> of <a href="http://www.wisebread.com/should-conforming-loan-limits-be-increased-0">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-12"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-make-ends-meet-when-youre-house-poor">How to Make Ends Meet When You&#039;re House Poor</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/its-now-easier-to-get-a-home-loan-even-if-you-have-student-loan-debt-should-you">It&#039;s Now Easier to Get a Home Loan Even If You Have Student Loan Debt — Should You?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-i-didnt-pay-my-mortgage-off-in-full">Why I Didn&#039;t Pay My Mortgage Off In Full</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-hidden-dangers-of-refinancing-your-mortgage">3 Hidden Dangers of Refinancing Your Mortgage</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/surprise-theres-a-gender-gap-in-mortgages-too">Surprise! There&#039;s a Gender Gap in Mortgages, Too</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Financial News Real Estate and Housing conforming loan limits FHA home loans U.S. Senate Tue, 25 Oct 2011 09:36:14 +0000 Xin Lu 760570 at http://www.wisebread.com