After another month has gone by with even more guideline changes for home mortgages, that have put the squeeze on borrowers who have "less than perfect credit" and for those who have less than 5% to put down have resultied in leaving some borrowers out in the cold.
This is a sad thing because there are many deserving people who have either had a rough spot or have had trouble saving up the required minimum deposit of 5% plus closing costs.
FHA to the rescue: With FHA quite simply if the client is in need to refinance and has paid their mortgage on time for the last 12 months and has no significant derogatories(foreclosure,bankruptcy,etc) in the last 24-36 months.(A Letter of Explanation of the circumstances may allow the loan to go through under that 24 month period if it show the events were out of the borrowers control).
The same guidelines apply to a purchase but with FHA the borrower is able to receive down payment assistance from organizations such as Nehemiah.
Since FHA allows up to 6% of the sales price, 3% can go through Nehemiah to make up the required down payment allowing the home buyer to do a 100% closing.
In addition the other 3% can be used toward closing costs. Wow, all this and great rates!
This week alone FHA has allowed me to help 3 clients that would not have otherwise qualified with conventional standards.
FHA is not what sub-prime was. The client must meet sensable guideline criteria, that places this program in the middle of sub-prime and conventional mortgages.
Not a bad place to be!
At the end of the month I can truly say that FHA is my go to source to meet the needs of many of my clients.
Thank God we have it!