FHA and Investor Specialist

Aren't All Lenders The Same?

A lot goes into your process when buying a home. It is a big event. Finding the right neighborhood, a great floor plan, the right number of bedrooms and of course, the right price! The purchase of a home will be one of the biggest investments you will make in your lifetime.

One of the primary details in any home buying process is how you plan to pay for the home. If you have all cash, great! No worries! The process will be a smooth one! However, most of us are not fortunate to have that kind of cash lying around the house. That is why it is so important to work with a lender that understands the process.

Many people think what's the difference? Who ever can get me the best interest rate wins! Think again. There are many factors you should consider in choosing a lender. This one company and one loan officer could make or break the deal with one simple mis-step!

When chosing a lender, here are a few tips to consider in making a decision, not all lenders are the same:

1) Is the company you are considering a Mortgage Broker, Mortgage Banker, Bank or Credit Union? How long have they been in Business? Understanding the difference between types of lenders will help you make a more informed decision in choosing the best fit for your needs. A Mortgage Broker can shop your loan with many larger lenders but do not lend their own funds. A Mortgage Banker does lend their own funds, but may be limited in the programs available. The Mortgage Banker will probably not collect the payments on the loan. They will sell the loan to a larger company. A Bank also lends their own funds and will probably collect the payments on the loan. They may have more strict lending guidelines than a Mortgage Bank. A Credit Union will also lend their own funds, may collect the payments but may also be limited in the programs available.

2) How long has the Loan Officer been doing Mortgage Loans? Experience in understanding the loan programs and the best loan for your situation can save you thousands of dollars up front as well as over 30 years.

3) Does the Loan Officer listen and understand your current financial position? It is important you are working with someone that can offer solutions to problems you may be facing. Anything from credit issues, money for a down payment, time on your job. A good Loan Officer will be able to provide advice on the best approach in handling every situation. There are programs available for with people with credit scores as low as 620, they will be able to advise you on how to improve your credit score. They will know the programs available for 100% financing in your area as well as which programs may allow gift funds. BE AWARE. If any loan officer says it is necessary for you to "fake" any documents or misrepresent anything on your loan application, this is considered LOAN FRAUD and is punishable by law. A good Loan Officer is able to help you through situations without needing to "fudge" on anything.

4) Interest Rates and Fees. Most Lenders are competitive in rates. Compare rates with different lenders and the costs associated with obtaining the loan. The thing that may vary greatly is fees. It is a good idea when shopping for a mortgage loan to ask for a Good Faith Estimate of Costs to compare what charges the lender may be charging. Settlement fees, title fees and recording fees should remain consistent but may vary by a small percentage. Once you are in escrow, these fees will be determined and should not increase.

5) Time periods. Understand how long it will take your lender to process, underwrite and close your loan. Many of the larger lenders and banks may take longer than you have on your contract. Make sure they are able to comply with contract dates or make your offer according to the time frame it will take your lender to complete the process. You do not want to face penalties from the seller for not closing on time. The Loan Officer should be able to tell you from beginning to end what to expect. Do not be left in the dark.This is YOUR loan. You should not have questions about where in the process you are.

These are just a few points to consider when looking for a lender. Any one of these items if not handled by a professional could be costly in your transaction or cause the loan to go south at the last minute. Working with a qualified Loan Officer at a reputable company will ensure less stress on your part. In addition, you should feel comfortable with this person. You are entrusting them with every aspect of your income and assets and you want to know the information will be kept confidential and handled with care. You wouldn't buy a car without driving it; you shouldn't get a loan without interviewing some lenders!

Not all lenders are the same. If you need assistance in finding a lender, please feel free to contact me and we can discuss!

Making the Home of Your Dreams A Reality. As your Agent of Possibibility it is my intent to make your home buying or selling process a smooth one!

Please feel free to Subscribe to All Possibilities Throughout San Diego or contact me at 619-838-4408. 

                                                     

Here are a few facts to help you decide.  We'll start off with some consumers who see a Realtor as the big bad wolf just waiting to take all the change out of their pockets.

No matter how you view it, the facts are:  Realtors do not get paid until the transaction goes to settlement.  The commission stays the same no matter how many hours, negotiations, paperwork, calls, e-mail, setbacks, advertising, hand holding and sweating the Realtor does.

Hours:    For one client alone, the hours begin with the first meeting and signing the appropriate forms.     

This can sometimes take two hours after explaining the paperwork, and if a buyer is the client -- there is the building of rapport and also some idea of what the buyers needs are.  Arriving at whether or not they are pre-approved and if not, do they need help with a lender.  Then comes the task of assigning the right lender and if they have funds for a conventional loan or do they need FHA assistance.  Hours are assigned to searches for homes that will interest the buyer.

If the client is a Seller, the Realtor may be going through an interview.  This is the same as positioning for employment.  Because of the internet, many consumers are aware they have the right to examine more than one agent's credentials.  The agent has to show that he can meet the needs of the client with the products that he presents.  The marketing plans are an essential part of that presentation.  Here again there is a time for building rapport and if the agent is engaged, more forms will be completed.

Calls:       These are made when certain issues arise and whether or not they can be resolved.

E-Mails:  To keep the client abreast of progress on the sale of a home or finding a home suitable for the client's needs.

Negotiations:    This is the one where the Realtor is worth his or her salt.  A lot goes into that word; it is not limited to the strategy used by an attorney in winning a case.  So many issues can arise when initiating a contract that they would be too mumerous to mention here.  When the client walks away happy, the Realtor has successfully completed the terms.

Advertising:     Your Realtor has to spend the time to make sure a home has the exposure neccessary to get sold.  For the buyer, the Realtor scans every option out there and this means the Ads that come through e-mail and other sources that will give his client the best choice possible.

As far as handholding goes, this is the great relationship that develops between the Realtor and the client.  In the end, the client truly realizes what he paid for and does not have any further doubts.

                                           

Just read on Sean's Blog on Foreclosureradar.com last night that revealed a study was done that concluded that foreclosures sell for 20% less than market value.  I have a few issues with this study as follows:

1. Isn't market value what a buyer will pay for the median home in a market?  If the market is 30% foreclosures than that is a substantial portion of the market.

2. This study was done by non REALTORS who never set foot inside these properties and just like our friends at Zillow, Redfin, and Trullia they are comparing apples to oranges.  The study is based on geographic areas and square footage in county records.

3. Didn't the study take the condition of the property along with the location into consideration?  Did the homes in the study back to the freeway or front to the Lake? Had the prior owner intentional damaged the house and had every amenity including the kitchen sink been removed and sold on Craig's list?  Had the local scavengers and gang bangers looted the house?  Was the house boarded up tight to avoid any further damage? Was any of this taken into consideration...NOPE! 

Lenders dump sub standard properties on the market and refuse, as a rule, to put them even in minimum FHA compliance for occupancy.  So when the home sells for 20% below average market value in the area should anyone actually be surprised.  Back in the 1990's when the lenders realized that they were actually competing for buyers against each others REO's they were forced to rehab the property to at least minimum livable standards.  This kept the market moving forward, the REO inventory selling, and the buyers at least getting the home in habitable condition.  As the time on market increases perhaps we will turn back to that method of marketing REO's. 

Here's a novel idea.  Use a REALTOR to sell you house Mr. Lender not some Gen X-Y bean counter who does not know diddly snot about the market or selling real estate who you gave the title Asset Manager fresh out of 2 whole years of College.  Yes I do know that there are plenty of seasoned good Asset Managers out there but they are few and far between just ask most REO listing agent if you don't belive me.

Are you gearing up to buy your first place? Shopping for a home is exciting, exhausting and a little bit scary. In the end, your aim is to end up with a home you love at a price you can afford. Sounds simple enough, right? Unfortunately, many people make mistakes the prevent them from achieving this simple dream. Arm yourself with these tips to get the most out of your purchase and avoid making 10 of the most costly mistakes that could put a hold on that sold sign.

1. Not Knowing What You Can Afford As we've all learned from the subprime mortgage mess, what the bank says you can afford and what you know you can afford or are comfortable with paying are not necessarily the same. If you don't already have a budget, make a list of all your monthly expenses (excluding rent), including vehicle costs, student loan payments, credit card payments, groceries, health insurance, retirement savings and so on. Don't forget major expenses that only occur once a year, like any insurance premiums you pay annually or annual vacations. Subtract this total from your take-home pay and you'll know how much you can spend on your new home each month. If you end up looking at homes that are outside your price range, you'll end up lusting after something you can't afford, which can put you in the dangerous position of trying to stretch beyond your means financially or cause you to feel unsatisfied with what you actually can afford. You may even learn that you can't afford the type or size of home that you desire and that you need to work on reducing your monthly expenses and/or increasing your income before you even start looking.

2. Skipping Mortgage Qualification What you think you can afford and what the bank is willing to lend you may not match up, especially if you have poor credit or unstable income, so make sure to get pre-approved for a loan before placing an offer on a home. If you don't, you'll be wasting the seller's time, the seller's agent's time, and your agent's time if you sign a contract and then discover later that the bank won't lend you what you need, or that it's only willing to give you a mortgage that you find unacceptable. Be aware that even if you have been pre-approved for a mortgage, your loan can fall through at the last minute if you do something to alter your credit score, like finance a car purchase. If you cause the deal to fall through, you may have to forfeit the several thousand dollars that you put up when you went under contract.

3. Failing to Consider Additional Expenses Once you're a homeowner, you'll have additional expenses on top of your monthly payment. Unlike when you were a renter, you'll be responsible for paying property taxes, insuring your home against disasters and making any repairs the house needs (which will occasionally include expensive items like a new roof or a new furnace). If you're interested in purchasing a condo, you'll have to pay maintenance costs monthly regardless of whether anything needs fixing because you'll be part of a homeowner's association, which collects a couple hundred dollars a month from the owners of each unit in the building in the form of condominium fees.

4. Being Too Picky Go ahead and put everything you can think of on your new home wish list, but don't be so inflexible that you end up continuing to rent for significantly longer than you really want to. First-time homebuyers often have to compromise on something because their funds are limited. You may have to live on a busy street, accept outdated decor, make some repairs to the home, or forgo that extra bedroom. Of course, you can always choose to continue renting until you can afford everything on your list - you'll just have to decide how important it is for you to become a homeowner now rather than in a couple of years.

5. Lacking Vision Even if you can't afford to replace the hideous wallpaper in the bathroom now, it might be worth it to live with the ugliness for a while in exchange for getting into a house you can afford. If the home otherwise meets your needs in terms of the big things that are difficult to change, such as location and size, don't let physical imperfections turn you away. Besides, doing home upgrades yourself, even when you have to hire a contractor, is often cheaper than paying the increased home value to a seller who has already done the work for you.

6. Being Swept Away Minor upgrades and cosmetic fixes are inexpensive tricks are a seller's dream for playing on your emotions and eliciting a much higher price tag. Sellers may pay $2,000 for minimal upgrades or staging that you'll end up paying $40,000 for. If you're on a budget, look for homes whose full potential has yet to be realized. Also, first-time homebuyers should always look for a house they can add value to, as this ensures a bump in equity to help you up the property ladder.

7. Compromising on the Important Things Don't get a two-bedroom home when you know you're planning to have kids and will want three bedrooms. By the same token, don't buy a condo just because it's cheaper when one of the main reasons you're over apartment life is because you hate sharing walls with neighbors. It's true that you'll probably have to make some compromises to be able to afford your first home, but don't make a compromise that will be a major strain.

8. Neglecting to Inspect It's tempting to think that you're a homeowner the moment you go into escrow, but not so fast - before you close on the sale, you need to know what kind of shape the house is in. You don't want to get stuck with a money pit or with the headache of performing a lot of unexpected repairs. Keeping your feelings in check until you have a full picture of the house's physical condition and the soundness of your potential investment will help you avoid making a serious financial mistake.

9. Not Choosing to Hire an Agent or Using the Seller's Agent Once you're seriously shopping for a home, don't walk into an open house without having an agent (or at least being prepared to throw out a name of someone you're supposedly working with). Agents are held to the ethical rule that they must act in both the seller and the buyer parties' best interests, but you can see how that might not work in your best interest if you start dealing with a seller's agent before contacting one of your own.

10. Not Thinking About the Future It's impossible to perfectly predict the future of your chosen neighborhood, but paying attention to the information that is available to you now can help you avoid unpleasant surprises down the road. Some questions you should ask about your prospective property include:

* What kind of development plans are in the works for your neighborhood in the future?

* Is your street likely to become a major street or a popular rush-hour shortcut?

* Will a highway be built in your backyard in five years?

* What are the zoning laws in your area?

* If there is a lot of undeveloped land? What is likely to get built there?

* Have home values in the neighborhood been declining?

If you're happy with the answers to these questions, then your house's location can keep its rose-colored luster. Buying a first home can seem stressful and overwhelming, and it isn't without its share of potential pitfalls. If you're aware of those issues ahead of time, you can protect yourself from costly mistakes and shop with confidence. For many people, a home is the largest purchase they will ever make, but it need not be the most difficult.

Original article by Amy Fontinelle, August 3, 2010, Investopedia.com

The S&B Real Estate Team assists people in buying and selling real estate throughout Southwest Washington. We are proud members of Keller Williams Realty – Premier Partners in downtown Vancouver. Our local expertise covers: Vancouver, Battle Ground, Camas, Washougal, Brush Prairie, Hockinson, Ridgefield, Woodland and La Center. If you or someone you know is considering living or investing in Clark County, please contact us. Jamie Carroll can be reached at 360-609-6775. Steve Borwieck can be reached at 360-241-7305. Or drop us a note on the “Contact Us” page at www.sbreteam.com. We are here to help!

Good Friday! There are some (big) changes to the FHA program beginning on September 7^th, 2010. 

FHA is lowering their Up Front Mortgage Insurance (Financed on top of the loan) from 2.25% down to 1%. Yes, this sounds great doesn't it? Not so much, they are raising the monthly mortgage insurance from .55% to .90%. It may not sound like much, so let's take a look at the example below:

 

How does this affect our clients? 

$200,000 Purchase price

4.5% Interest Rate 

PRE- September 7^th

Principal interest and mortgage insurance payment: $1,127.16

 

AFTER- September 7^th

Principal interest and mortgage insurance payment: $1,172.45

 

As you can see the payments will rise by $45.29 in this example.

  

If you have a borrower looking for a home now (or on the fence waiting), it's important

to let them know about these changes. This can alter their "approved for" amount by as much as $10,000!

 

It's important to work with someone who understands how these changes will affect you and your clients.

Please let me know if I can help in any way.

Have a wonderful Weekend! 

Travis

 

Below you will find the actual letter sent out from David Stevens.

 

  

August 5, 2010 LINKS

Over the past week, Congress has taken quick action and passed H.R. 5981.

The bill gives FHA the authority to adjust its annual mortgage insurance

premium, yielding approximately $300 million per month in value to the FHA

Mutual Mortgage Insurance Fund at a time when its reserves are perilously

low.

As I have previously stated in my testimony before Congress, FHA will lower its

upfront premium simultaneously with the increase to the annual premium¹. It

is our intention that effective on September 7 insurance premium will be

adjusted down to 100 basis points on all amortization terms and the annual

mortgage insurance premium will increase to 85--‐90 basis points on amortization

terms greater than 15 years². A Mortgagee Letter will be forthcoming once

President Obama signs the bill into Law schedule, I wanted to immediately

inform the industry of our plans so the lending community can begin preparing

for the operational and system structure on all new case numbers by September 7, 2010.

 

With this authority, FHA is in a better position to address the increased

demands of the marketplace and return the MMI fund to congressionally

mandated levels without disruption to the housing market. While we appreciate

and applaud this recent action, there is still work to be done. HUD remains steadfast

in its commitment to comprehensive FHA reform legislation, similar to the FHA

Reform Act passed earlier this year by the and risk management efforts.

We hope Congress will take swift action to pass management efforts will not be

complete without the ability to monitor lender performance and ensure compliance

with our rules.

Although the transition timeframe is short, implementation by September is

critical. Thank you in advance for the efforts of you and your organization to

make this change happen on such short notice. We appreciate your hard work

and continued partnership.

 

¹The upfront and annual premium changes do not apply to the following FHA Programs: Title I,

HECM, HOPE for Homeowners (H4H), Section 247 (Hawaiian Homelands), Section 248 (Indian

Reservations), Section 223 (e) (declining neighborhoods), Section 238(c) (Military Impact areas in

Georgia and New York).

Travis Newton

Oregon FHA & USDA HUD Rural Expert

Sr. Mortgage Banker

Preferred Mortgage

503.931.4490

travis@pmforegon.com

www.travis-approves.com

http://oregonfhaloans.wordpress.com

 

ML137

A blind date has got to be one of life's scarier moments! Many of us have been the recipient of this form of 'relationship assistance' at some point in our lives.

Although, it's exciting to not know exactly who you will be meeting, the experience is fraught with much angst and trepidation for precisely the same reason...you don't know exactly what you'll get when your date shows up in person!

Yet, today, online dating has spawned hundreds of thousands of successful unions. I know at least eight happily married couples who met online and are still going strong years later.  However, we all suspect that for every success story, there are oodles of folks who don't have a storybook outcome. 

We all worry about the potential for this:

• A person whose in person appearance is not even remotely connected to how they appear online

 

• Fake Testimonials which promise more than they deliver

 

• Individuals who are not what they purport to be...ie the 'pretend doctor' syndrome with fake credentials

These issues are also a concern for millions of consumers who are now going online to select professional services like those provided by members of the real estate community.  Data from the National Association of Realtors indicates that more than 80% of all consumers will utilize the Internet as a part of their selection process for choosing an agent and/or home.  Selecting the right agent for your specific concerns can make all the difference in the world.  The good news is there are many great research tools which are now available to assist you in making a good choice.

Although, there are no guarantees that even your best efforts will yield the results you desire, taking the time to do some preliminary research will greatly enhance your prospects for a successful match.  Let's examine some critical aspects which you should consider as you review potential prospects.

 

Do You Know if they're the Real Deal?

I mean this literally.  Make sure you're dealing with a real person or business.  Do some checking.  It's pretty easy.  Here are some suggestions:  Contact the local real estate board to inquire about their membership and status.  If they indicate they hold certain awards or designations, call or go online to see if they are on the membership roster.  Google the physical location/address and if you still have doubts, do a drive by.  If things don't check out at this basic level, there's a problem.

 

Are their Products Visible?

You'll be hiring a real estate agent to market your home.  The disappearing agent who sticks a sign in the yard and NEVER calls is well documented in real estate folklore. 

But what about the disappearing listing? When the home is placed on the market, it becomes a part of the real estate companys' listing portfolio. 

Did you know that there is a dramatic difference between the levels of exposure which your home may receive on the Internet? Did you know that your agent's understanding of Search Engine Positioning and Optimization will be key determinants of your exposure?   If your home cannot be seen online, it's almost equivalent to not being listed because most buyers are searching online for homes.

For instance, a good online real estate agent can literally put your home on the map...the google indexing map that is.  Imagine being able to say to your friends and family...did you google my home?  If you're competing with 50 other homes for sale in your community, this may make all the difference in the world.

 

Do They Know What They're Talking About?

Here's the area where the Internet can be of the greatest benefit.  While an increasing number of agents and their agencies have websites, these will provide you with only static information about their listings and services.  To dig deeper, it's prudent to see if the agent you are considering also writes a blog.

Blogging provides a tremendous amount of benefit to the consumer who is in the process of selecting an agent.  For starters, it can save you TIME!  In reading a good agent blog, you will be able to determine the areas of an agent's expertise, their style with clients, the kinds of transactions they handle, and the way they resolve conflicts and solve problems.

 

Can You Interview them Without Extra Hassle?

You'll find that reading an agent's blog is similar to conducting an interview.  What's great is that you can e-mail or respond in the comment section if you have any additional questions or would like clarification on certain issues.  This type of dialog can be tremendously informative and provides a great platform to become comfortable with someone before hiring them for the job.

It's important to hire the right agent to get the job done.  Using this simple list will improve your chances of selecting someone who has the skill and personality which will be most in alignment with your specific needs.  If you are in the Grand Rapids, Michigan area and are looking for an Online Real Estate Expert, the real estate specialists at Audu Real Estate would be happy to explore how we can assist you.

 

Where Should you be looking?

Our listings are advertised in a number of Venues which include:  our website, numerous blogs, the Grand Rapids Association of Realtors Multiple Listing Service, NAR (National Association of Realtors), Zillow, Trulia, Real Estate Shows, Google, Yahoo, Oodle, Twitter & Flickr.  Contact us to discuss how we can create an Internet marketing strategy which makes sense for you!

*This blog was orginally published in 2008 and is part of the 'Oldies but Goodies' series from Audu Real Estate.

Copyright 2008, 2010  Audu Real Estate  All Rights Reserved

 

Lola Audu, is the Designated Broker & Owner of Audu Real Estate.  Our company specializes in helping people buy and sell homes in the greater Grand Rapids, West Michigan area.  We've had the privilege of helping hundreds of clients succeed in their goals of purchasing and selling property including demonstrated success in the negotiation of Short Sale Transactions. You can contact us via e-mail @ info@auduhomes.com or by phone at 616-791-0511. 

           

I was speaking with a home owner a few weeks ago who was upside down in their mortgage and I had to ask the question " How did you get here?" their response was not shocking but a little hurtful to be honest because its the American dream turned nightmare.

They explained to me how they purchased their home in 2007 for 589K and at that time was told the house was worth about 650-675k, about a year after the purchase their loan officer called and was promoting a Refinance program that they could utilize to pull some cash out and do some needed renovations around the house. All they needed to do was refinance, pull some cash out and take care of the work, he explained to them that they were refinancing their entire loan into a new product which happened to be a 5/1 Interest Only ARM.  He promised that they could Refinance out of this product once they were done with renovations and get back into a fixed rate program.  But for the time being they could save a little by having interest only payments while taking care of the renovations. To my sellers this was what they were waiting for; a chance to fix the house in one shot without having to work 80 hours a week for the next year to do so.  So they agreed; this move when looking back was the beginning of the end. 

The started renovations and realized that to complete the various projects it was going to cost an additional 10-15k in labor and material;   they called their loan officer and explained the situation, he said that there home has gone up in value since the initial refinance and why not go back in and take out another 25-30k just to be sure this was the last time. So after careful consideration they pulled the trigger again. 

At this point they had mortgaged their home all the way up to 694k between actual cash out and closing cost. The sellers explained that even though they were paying more than 100k more than their original purchase it was OK; because their dream home was complete.  The only problem is that the economy is starting to shift in a different direction and values are dropping very quickly. My sellers whom both worked in the financial industry were given severance packages and laid off as a result of the unsteady market.  Now they had some cash, a house priced about 100k + over market value and no where to turn, so they asked their loan officer; "what should we do?" he stated that without equity there wasn't much he could do.   My sellers realized that the hit to the market was now very close to home so they I attempted to liquidate their assets in hopes of keeping the wheels turning but that was short lived as they realized that the severance package money was not going to be enough to hold off the bill collectors for long.  It was in that December of 2009 that they went through their first late mortgage payment. It was a blow to my sellers ego's as they both had  750 + FICO scores and was not accustom to paying bills late, they attempted to send partial payments but those were returned by the lender.... after 3 more months of late payments and non payments, they decided that it was time to sell. This was a very sad and embarrasing time for my sellers.

They struggled for the 3 months as FSBO trying to eliminate the Realtor fees in hopes of just selling the house. But that didn't work, now they are well over 6 months behind on their mortgage; they contacted me as a Short Sale specialist in the area and they expressed interest in attempting a short sale on the property.  Although at this point they owe roughly 726k between past due amount, lawyer fees and bank fees. We listed at fair Market value for just under 560k, it took about 2 weeks and we just received an offer for 549k...

In the loan officers defense, my sellers don't blame him, he did what was being done everywhere which was lend money off of inflated values and put home owners in some sticky situations. It was basically 3 blind mice the blind leading the blind... Many of past judgement on folks in this situation, but Who do you blame? the home owner, the loan officer, the economy, the appraisal...who? you be the judge...or not

The home buyer sees an ad on the internet for guaranteed 5 day closings, no minimum score and stated income from a "lender". Oh the hilarity! Unfortunately it can also end with a home buyer, home seller, a couple of real estate agents and their brokers, and a few other people doing a lot of work for nothing. Many outrageous claims are made by lead generation companies who sell the information to dozens or more loan officers who will call, email, fax, or email.

If it sounds too good to be true and every true mortgage professional is telling you there is something wrong with what one particular company or person is offering you can pretty much bank on it: it's smoke and mirrors designed to hook the buyer in and hope they'll get so far in they feel compelled to continue. They will, too, threatened by that ominous closing date on the purchase agreement and they will ride a bad loan all the way to the closing table then be strapped with it for years.

In defference to some wild claims about FHA I have read lately here are five facts every buyer and agent needs to know:

1. FHA does mention credit scores but lenders have overlays and almost every lender requires a minimum middle credit score (not necessarily the FICO score) requirement is 620. Some lenders even require a 660. There are no major lenders actively closing loans with credit scores lower than 620 and only a very few broker type lenders closing down to a 580.

2. FHA does not make loans they insure loans. The loan is actually made by lenders and often sold to Fannie Mae or another major pool investor. The only time FHA actually sees the loan is after it is closed and the files are sent to them for their insurance records. Most bigger lenders are called Direct Endorsement (DE) lenders and they make the actual decision. 

3. FHA does not make loans to people with bad credit. FHA was never intended for bad credit borrowers. While it is true they do have less stringent guidelines than some conventional conforming loans it is not true they accept people who have neglected their payments and have been careless with their credit over the years.

4. FHA does finance rehab, upgrades and other construction costs to existing homes. In fact the FHA 203k streamline is a much underused FHA loan product. Many lenders do not offer this loan and the majority of loan officers do not know how to structure the FHA 203k streamline which offers up to $35,000 in costs.

5. FHA does offer a special loan with only $100 down payment required on HUD owned foreclosure homes. This is also something often overlooked and not offered by many lenders. Ask your local FHA home loan specialist about the HUD $100 down FHA home purchase loan - which is only valid for primary home owners, not investors.

There are a hundred other FHA facts and there is a growing list of "Myth's Busted" at Mortgage Myth Busters where you also can ask a question. Or, as you may have noticed, on the original publication page for this posting at Active Rain there are three ways to immediately contact the author.

 

Ken Cook - Community Outreach Leader Southeast Region (I make friends, that's my job :) - FHA, USDA, VA and Conventional Home Loans (678) 439-8683 NMLS ID 208452

My employer: AmericaHomeKey, Inc., 2300 Windy Ridge Parkway, 8th Floor North Tower - 840N, Atlanta, GA 30339. NMLS ID 102930. Georgia residential mortgage licensee 23191. Equal housing lender.