subject: Rebuild Your American Dream And Find Out How To Qualify For Fha Refinancing [print this page] Have you gone through a bankruptcy that has been discharged over the last two years? Are you looking to refinance even after a low FICO score? Or are you having trouble meeting your monthly mortgage payment and would like to reset your ARM (Adjustable Rate Mortgage)? FHA refinancing can help you to achieve it all. FHArefinancing is basically backed by the Federal government. These loans typically have much lower rates than conventional loans which result in much lower payments. The mortgage and refinance mortgage are typically offered for 30 years at fixed rates which provide you with predictable payments for the next 30 years, unlike conventional ARM loans offered by other banks which may have the payments change every month.
FHA does not issue loans but insures the residential mortgage. It gives the lender confidence that the loan will be paid even if the borrower defaults on a loan payment. Today, FHA plays a critical role in financing for minority borrowers, first time home buyers, borrowers who have troubled credit history, and borrowers who have little money to put down on a home. Most traditional lenders require a minimum down payment, which preferably is around 20% of the purchase price of the home. While in FHAloans, you may not have to pay any down payment or may have to pay a minimum down payment of 3% and still get the mortgage loan. And this required portion can be a gift to you; many lenders dont allow you to do so but FHA loan would allow this.
Lets us evaluate what are the factors that influence the qualification for FHA loans and if you have a blemished credit history or had filed up for bankruptcy what leads to your qualification for a FHA loan or refinance.
In addition to a qualifying steady income, your credit history is also a determining factor to qualify for FHA, though the standards are loose in comparison to conventional loans. FICO scores as low as 580 are also acceptable. You must also have enough income to pay your housing costs plus all additional monthly debt (43% ratio). These ratios can be exceeded somewhat with compensating factors.
If you are still paying on a Chapter 13 Bankruptcy, FHA may consider approval if only your records show payments towards it have been satisfactorily made for more than a year. You are also required to give a full explanation of the bankruptcy with the loan application and must also show a good re-established credit. In case of Chapter 7 Bankruptcy, at least two years must have elapsed since the discharge date. The discharge date is when all debts included in the Chapter 7 bankruptcy are liquidated and then a notice of discharge has been issued by the bankruptcy court. This is not to be confused with bankruptcy filing date.
FHAmortgage loans are generally not available to those who have gone through a foreclosure or who have given a deed in lieu of foreclosure within the previous three years. An exception may be granted to those who have been able to establish a good credit score with a reasonable explanation of why foreclosure took place.
According to the FHA guidelines, any judgments have to be paid in full prior to closing. Any minor collection in nature usually need not be paid in full for the approval of the loan. But any delinquencies in federal tax liens or federal student loans are not eligible for the FHA loans or refinance. Never has this kind of lender reassurance been more critical than in todays crisis laden credit environment. This also comes as a boon to those borrowers who would like to rebuild their American dream and make a fresh start.
by: Ask Bill
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