Extremely Important as of January 20, 2010 – New changes have just been announced. Please read :
FHA Loans & FHA Mortgages - Rumors – Important Information
In the last several months, I am still hearing about some rumors about FHA loans that aren't true. They are basically of opinion and speculation. I wrote this blog back in the beginning of October of 2009. It will give you a good idea about what rumors that I am talking about.
FHA loans to 5% down? No seller concessions allowed? Rumors? - The government at its BEST again !!!!
What rumors am I still hearing? The biggest one is that the FHA seller's concessions has gone from 6% to 3%. This is also known as seller's help. Yes, it was talked about in September and October. Someone in congress tried to get this to pass, but it never made it through.
This part is extremely frustrating to me, especially when the majority of the time, I am reading this kind of information in a realtors blog post. And it's doubled that when I hear it from a loan officer. It's almost like people are just flipping a coin about this, not caring too much if the information is accurate, just hoping to make the phone ring. The reason I say this is because I am seeing and hearing more of these tactics from loan officers when it comes to credit scores. I will talk about this example in my part 2 segment in a few days.
What it comes down to is the FICO scores, aka Credit Scores. The standard score for many mortgage companies is 620 and there are some that have a cutoff of 640. Yes, there are a few that will go below 620, all the way down to either 539 or 580.But the problem here that many don't understand is that these types of loans with the under 620 score can't be sold to other investors on Wall Street. So these companies will now portfolio these loans. I will talk about this in greater length in Part 2.
On the other hand, when it comes to FHA loans, they don't have a credit score cutoff. Under FHA, you can actually have no credit scores with no credit. Yes, this is still allowed, but find a lender that will actually do this type of loan. Another part of what is called lender overlays. Lender overlays is basically the lender adding more rules and guidelines to the mandatory guides that are set by HUD/FHA and others such as Fannie Mae and Freddie Mac. And under FHA's guidelines, you could still have under a 500 credit score, but you would need 10% or more down. This has not changed since I wrote about this update.
Summary : Overall, you just need to be very careful to where you get your updates from, no matter if it's from a trusted realtor or loan officer. The internet can be powerful,yet it can be damaging, depending on where you get your information from and from whom. Just because one says that they are an expert, might just be good advertising to gain your trust. Or because they think they are an Expert. Keep in mind, an Expert is one that doesn't know it all, at least this is my opinion. Please read below for more on this topic.
To be or not to be an Expert, that is the question. So, the question is, who has the answer.
And keep this in mind, what I talked about above is because some people are stating this information as fact now. Yes, HUD is still talking about some of these changes and so is Congress. And we could see some changes in less than a month. But to me, it's a rumor until it becomes a true hard fact that would be reality.
FHA Loans Rumor Alerts - You don't need 10% or 20% down & more about credit scores - Part 2 of 2
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For more information on FHA loans, please go to this link. The FHA Expert
For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit
For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!
Copyright © 2010 by Jeff Belonger of Infinity Home Mortgage Company, Inc