More help from me Friends NEEDED/FHA (Homestead: foreclosed, condo)

[Oobie119]

Okay guys,

Please guide me!! I just want opinions here, and I am COMPLETELY uneducated on this so I need you to spell it out for me in dummy terms

We ran into a problem with a loan.. We went through a mortgage broker who said we did not meet the requirements for a conventional loan.. we had 20% down, but here's the kicker: My hubbys crappy credit, they use the median score of the LOWEST persons credit. Based on that, not only would we need 20%, but also and addition chunk in the bank to cover a minimum of 4 months mortgage..

What is an FHA LOAN and do I want one?? We ran our preapproval through, but there has to be a reason it's not as conservative as a conventional loan. I understand the upfront payment for the PMI and the additional .05% annually.. and I also understand you keep it for 5 years no matter what..

WHat are the other downfalls? Surely this can't be it?? I am NOT white trash, We have 20% down but due to credit issues cant get a loan.. I don't want to be labled as someone trying to purchase a home when I have no job security or such.. Can someone please tell me what the BIG risks are in an FHA ???

[Big House]

Originally Posted by Oobie119

Okay guys,

Please guide me!! I just want opinions here, and I am COMPLETELY uneducated on this so I need you to spell it out for me in dummy terms

We ran into a problem with a loan.. We went through a mortgage broker who said we did not meet the requirements for a conventional loan.. we had 20% down, but here's the kicker: My hubbys crappy credit, they use the median score of the LOWEST persons credit. Based on that, not only would we need 20%, but also and addition chunk in the bank to cover a minimum of 4 months mortgage..

What is an FHA LOAN and do I want one?? We ran our preapproval through, but there has to be a reason it's not as conservative as a conventional loan. I understand the upfront payment for the PMI and the additional .05% annually.. and I also understand you keep it for 5 years no matter what..

WHat are the other downfalls? Surely this can't be it?? I am NOT white trash, We have 20% down but due to credit issues cant get a loan.. I don't want to be labled as someone trying to purchase a home when I have no job security or such.. Can someone please tell me what the BIG risks are in an FHA ???

Oobie,
Others can probably answer you questions in terms that will serve you better than I can attempt to do - for sure!!
But, have you approached any relatives (your parents / his parents as examples) to see if they might help, or possibly co-sign the loan for you? Please - don't answer that here - OK. I just posed the question as something for you to consider.
I would try another lender as well. Some lenders / mortage brokers are having greater difficulty making loans, or having access to money than others. I wouldn't go for broke with one lender or mortage broker. I have seen people fail with one lender and succeed with others. Also, different lenders will come up with different criteria that they may accept and consider. Have they looked at the first time buyer credit from the Government, or using a 401K or other pension that you may borrow from for a home purchase? Again, - I'm not looking for an answer - just things for you to consider.

[mr&mrssunshine]

try englewood bank, they were brilliant for our mortgage

[Dreamy46]

Do some reading in these pages:

FHA loan definition - Google Search

[Racelady88]

The biggest hurdle most folks have with FHA is their inspection guidelines. They can get nit picky about things and do not accept cash off in place of repairs, repairs must be made and an second inspection must be done.

[121804]

Originally Posted by Oobie119

What is an FHA LOAN and do I want one?

That's up to you to decide after much research through different sources.

Pros & cons to FHA. First off, it's not a loan through the government, but sill through the bank but the bank being able to hand over the burden to the govt. Thus, banks pick & choose who they approve for FHA.

I don't think it's white trash. I think it is white trash to buy a house you cannot afford, not take 5 mins to realize all the $$ that homes cost, get foreclosed on, and then sit around and whine looking for sympathy.

There are lots of stipulations to FHA and as mentioned above, the home inspection has to be done through a govt improved inspector and the whole process can take much longer than a conventional.

FHA rates stay the same for everyone no matter what their score.

FHA is appealing to many b/c one's credit score does not have to be high. That does not mean you will be automatically approved. Each bank has their own methods of approval on FHA applications. You want to make sure that the bank has an FHA underwriting team if you get approved.

Are you able to apply for a conventional loan on your own? Basically, could your debt to income ratio afford you to buy a home? You may or may not then need to list your husband on the mortgage (he could technically be put on the deed though). Again, this requires lots of shopping around. But I do not know about FL Homestead rules (SoFLGal or Hik might) & you could run into an issue.

FHA will require to run his score, paystubs, and spending habits over the past 12 months. Basically, they will want to know why the FICO score is so low. If there is a history over the past 12 months of him not paying debt, be prepared for some roadbumps w/ FHA.

[Dreamy46]

Oobie, you also need to be shopping more than one lender. While there are a few gems, on average, small independent mortgage brokers and their companies caused quite a bit of the damage during the housing bust with their questionable business practices. Talk to multiple lenders, then compare rates and above all, the fees.

Some new loan disclosure rules supposedly went into affect for the new year regarding the GFE (Good Faith Estimate) and hopefully SFGal will appraise us of what she's seeing in regard to the new standards.

[davery5872]

Originally Posted by Oobie119

Okay guys,

Please guide me!! I just want opinions here, and I am COMPLETELY uneducated on this so I need you to spell it out for me in dummy terms

We ran into a problem with a loan.. We went through a mortgage broker who said we did not meet the requirements for a conventional loan.. we had 20% down, but here's the kicker: My hubbys crappy credit, they use the median score of the LOWEST persons credit. Based on that, not only would we need 20%, but also and addition chunk in the bank to cover a minimum of 4 months mortgage..

What is an FHA LOAN and do I want one?? We ran our preapproval through, but there has to be a reason it's not as conservative as a conventional loan. I understand the upfront payment for the PMI and the additional .05% annually.. and I also understand you keep it for 5 years no matter what..

WHat are the other downfalls? Surely this can't be it?? I am NOT white trash, We have 20% down but due to credit issues cant get a loan.. I don't want to be labled as someone trying to purchase a home when I have no job security or such.. Can someone please tell me what the BIG risks are in an FHA ???

Have you checked to see if there are any errors on his credit report? When we bought our condo, I tracked our scores. When we finally apllied for our loan, my scores was lower by about 60 points. I looked at the current report and noticed a mistake. I got it corrected and the scores went up 40 points. We also had put some stuff on a credit card and the balance was over half the limit. This hurts your score. I have 4 cards with this company and lowered the limit on one card and raised the limit on the card with high balance. This raised my score about 20 points. My loan officer was very skeptical about me being able to raise my score. She could not beleive it when she pulled it again.

Can you qualify for a loan with just you on the loan? That could be an option.

[jvelte]

I got an FHA loan for our new house. I have perfect credit (803 average), but my wife doesn't and we didn't want to put 20% down as we needed money to put into the house right away. FHA only required 3.5% down. Everything went VERY smoothly, including the inspections. We just can't sell it in the first 3 years, which we won't be anyway. Also, with an FHA loan, it MUST be your primary residence and you must be living there within, I think 60 days of closing. They are also a little more strict on debt-to-income ratio. FHA this is 41%. There is nothing wrong with going FHA if you qualify. It's actually a very smart way to mortgage your home due to the low rates right now. Good luck!

[Rushmore]

You're worried about the wrong things.

Don't worry if an FHA loan is "white trash" (it isn't anyway). Worry if it is a financially sound move for you (it might well be).

These are big decisions. Don't get bogged down with imaginary stigmas.