Many still have questions in this lending environment. While guidelines on credit have tightened, there is still plenty of money to be lent. Many lenders, including mine, have increased minimum credit scores to obtain a FHA loan up to 600. This does not mean you need perfect credit, but you do have to have sufficient credit and show the willingness and ability to repay debt.
In order of importance, underwriters look at:
- Mortgage history/rental history
- Automobile loans
- Credit cards
With FHA loans, sufficient credit means you must have three open lines of credit with a satisfactory credit rating for 12 months. Satisfactory does not mean perfect. If you do not have sufficient credit, there are a couple routes that may help you qualify. These options include using alternative credit and/or non-occupant co-borrowers. These will not help if you have bad credit, but it will help if you have limited or insufficient credit.
The first route is alternative credit. If you do not have enough traditional credit on your credit report, we can use alternative tradelines including rental history, cell phone, car insurance, utility bills, telephone bills, etc.... If your history is satisfactory, we can use these if they are paid on time.
Another route is non-occupant co-borrowers. Non-occupant co-borrowers can be family members and they do not have to reside in the home you are purchasing or refinancing. Loans with non-occupant co-borrowers are also known as "kiddie condo" loans. The co-borrower's income, assets, liabilities and credit history are considered to determine credit worthiness.
And, no matter what your circumstances are, FHA permits home buyers to purchase a home with as little as 3.5% down payment. This money can come from a gift from a family member or close friend. They will also refinance homes up to 97.75% of your home current market value.
If you have any questions or would like to see if you qualify to purchase a home or refinance your current home, please feel free to contact me.
Bob Lowery
Office: 410-248-1762
Cell: 443-653-1720
bob.lowery@prosperitymortgage.com
Feel Free to visit www.marylandhomeloansonline.com to sign up for rate monitoring or to get pre-approved on line.
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