 |
GoApplyFHA.com specializes in FHA streamline loans and FHA streamline refinance. Our expertise in FHA mortgage loans guarantees that your loan process will go smoothly, and you can rest assured that our Loan Officers are highly qualified and capable of handling your specialized FHA needs.
An FHA loan, or Federal Housing Administration loan, is a government-backed loan, which means that the FHA guarantees the loan, reducing the lending risk and thus making it possible for us to offer you great rates, and provide loan opportunities to people with less than perfect credit.
We offer great FHA mortgage rates on FHA refinance loans. We offer FHA loans, FHA 203b and FHA 203k loans and other FHA loan programs in California. So whether you’re in Sacramento, Bay Area, Solano County, Fresno, Orange County, Los Angeles, or anywhere else in California, please contact us to see what we can do for you!
The Best Way to Apply for an FHA
One of the best ways to apply for an FHA loan is for the buyer to do everything possible to prove that he or she is serious. Underwriters love people that are prepared in that it makes their jobs so much easier. While securing an FHA loan is fairly easy anyway, taking a few steps in the right direction could make the process even easier and result in a quick approval.
The first way to apply for an FHA loan specific to underwriters is for the individual to do as much of the work possible. Saving the underwriter time in pulling together documentation is going to make an impression. While the approval of the loan would be dependent on many things, it never hurts to have the underwriter on the borrower’s side.
Before starting the process to apply for an FHA loan, a copy of the borrower’s credit report should be ordered. Each of the reports should be reviewed carefully so any omissions or inaccuracies could be cleaned up prior to applying for the loan. Going through this process prior to meeting with an FHA lender is going to show them the buyer is taking the process seriously. In addition, before the person starts to apply for an FHA loan, it would be important to spend at least six months paying every bill on time, eliminating high-interest credit cards, and writing a letter to the lender explaining any bad ratings. In addition, you should avoid purchasing big ticket items like cars and you should avoid changing jobs.
Then, to apply for an FHA loan, the person needs to make sure he or she can afford the monthly payment. To accomplish this, the borrower should have gone through the calculations of their debt versus income ratio to see exactly how much home can be purchased on their income and in relationship to their current bills. The borrower should also start saving money months in advance so that some amount of down payment can be applied to the loan when the home is purchased. This would show the lender that the person has the ability to save as well, as bank statements from all of the borrower’s accounts are required to qualify for an FHA loan.
When the person meets with the lender to qualify for an FHA loan, he or she should have a list of all required documentation, bringing everything to the meeting. Again, getting ahead of the game by being prepared is one of the best things a person can do when it comes time to apply for an FHA loan. Taking part in the process is something that lenders rarely see but a gesture they really appreciate.
In addition, by coming prepared to meet with your lender, the entire process of applying for the FHA loan and getting approved will be much smoother and faster. Even if your credit is not perfect or if you have no credit, a lender is typically willing to work a little more with a person that is prepared and shows that they are responsible enough to do a little legwork ahead of time.
To get a copy of your credit report you can complete the online loan application here or by calling 1.888.415.2000
Understanding the FHA Refinance Loan Process
For homeowners that have an FHA mortgage loan and those that want to refinance, either to make home repairs or benefit from equity in the home, an FHA refinance loan is possible. Just as with any other type of loan, the process for a refinance on an FHA mortgage is much the same. However, getting qualified is actually easier in that this government-backed loan has protective measures in place.
The first thing the homeowner needs to consider is the type of FHA refinance loan that would work best. One of the benefits for a refinance such as this is that options are far greater than with a traditional loan. Therefore, the homeowner should sit down with a qualified lender to discuss the list of possibilities.
Another thing the homeowner needs to know is the purpose for taking out an FHA refinance loan. For instance, some people want to take equity out of the home to send kids to college, take an expensive vacation or remodel their home. Some people want to consolidate debt while others are looking for a loan with a lower interest rate that could lower their monthly mortgage payment. Knowing the purpose of the loan would also ensure that the appropriate loan was secured.
Working with the lender of the FHA refinance loan, the amount the homeowner could afford to pay would be determined. This figure would be based on the debt versus income ratio, but also the person’s credit rating, the amount of interest rate that would be charged, and so on. Once all of the questions have been answered, the homeowner should spend some time shopping around for an FHA refinance loan to find the best program and rates.
Homeowners will find that there are a few options available to them. One is a cash out refinance. This is designed for those homeowners that have property that has increased in market value. Through this FHA refinance loan process, the homeowner is able to access their home’s equity and use it elsewhere. The result is taking out another mortgage that has a higher value than their initial loan. To get the most benefit out of this refinancing option, it is best if you purchased your home more than a year prior to refinancing, allowing you to refinance up to 85% of the appraised value of the home plus the allowable closing costs.
Another option is the streamline refinancing option. Through this FHA refinance loan process, the homeowner is actually able to decrease their monthly mortgage payment. This option is good if you have a loan in good standing and want to lower your monthly mortgage payments. If you have no substantial debt owed elsewhere, this option can allow you to save a little extra money each month to put into savings, retirement, use for daily living expenses or for entertainment.
Just as with the initial FHA loan, an FHA refinance loan would also be one backed by the federal government so qualification is much the same as what the person went through the first time. This type of loan has been around for a very long time and today, still provides great solutions for homeowners.
Using an FHA 203K for Home Improvement
The FHA or Federal Housing Administration is an important part of HUD, which stands for the Department of Housing and Urban Development. Through the FHA, people are provided with a number of mortgage loans for new and existing homes, refinance loans, and even loans that can help with the repair and rehabilitation of a single family home. In the last case, the program known as the FHA 203K is available.
With the FHA 203K, property owners can take a home in disrepair and transform it. In addition to being beneficial for the owner, this is also beneficial for the neighborhood. The Department of Housing and Development has a number of goals but one of their priorities is to create an opportunity for homeownership by offering loans for people with poor credit, those with a low down payment, and owners that need money for home improvement. The goal of the FHA 203K is to help homeowners revitalize the community and neighborhoods by repairing and remodeling homes to improve the community environment. HUD sees this as a very important program to communities around the US.
The FHA 203K loan is a very important option and because of this most lenders provide full support. For lenders that have already secured this particular home improvement loan, the outcome has been sensational. With this loan, local and state housing agencies, as well as nonprofit organizations benefit too. In fact, many lenders will secure an FHA 203K loan with a variety of other financial options that make rehabilitation easier for the borrower.
Many of the local and state home agencies that deal with finances have designed new programs wrapped around the FHA 203K loan. Then, depending on the agency involved, some will actually stay involved with the property during rehabilitation. With this loan, there is a commitment specific to lower income communities. HUD supports the Community Reinvestment Act and by offering FHA 203K loans, they are being supportive.
In addition to the FHA 203K loan showing communities that HUD is supportive, it also shows communities that the property owners are serious about cleaning up homes and areas that need rehabilitation. With this type of loan, a home can be improved in three ways. The first is for the home, as well as land to be purchased and rehabilitated. Second, the home would be bought and then moved to another foundation to be rehabilitated. Third, existing debt would be paid off and then rehabilitation would occur.
The 203K mortgage financing process is different in that it provides permanent financing. This means that the lender will not close on the loan and release the mortgage proceeds unless the property has been rehabilitated to the point that it will provide adequate loan security. Through this method, the lender is able to assess the risk and require improvements be made until their risk is low enough that the long-term mortgage can be completed.
This program takes away the use of numerous loans that previous home rehabilitators would have to take out on a home to repair it. With the FHA 203k, the buyer simply takes out one mortgage loan and uses that loan to purchase and rehabilitate the property.
What are the FHA Loan Limits?
Over the years, FHA loan limits have changed. FHA loans allow a homeowner to borrow up to 97% of the home’s value and the most recent FHA loan limits allow homebuyers more flexibility and options in the types of homes they can purchase.
The most recent change was announced by HUD, the Department of Housing and Urban Development, which now states that limits range from $271,050 to $729,750. These limits are for single-family dwellings as outlined by the Housing and Economic Recovery Act of 2008.
These new FHA loan limits went into effect as of January 1, 2009, which means that mortgage loans are available for single-family homes with a price up to $271,020 in areas of low cost but in high cost areas, the price goes as high as $729,750. Interestingly, the initial FHA loan limits prior to the stimulus package was only $362,790 so the new numbers recently announced by HUD are quite an improvement. This increase in loan amount means that more people can live the American dream of owning a home.
Obviously, the current economy is tough on finances, leaving many people in a tight spot. Most people live on tight budgets and most have limited access to credit. Because of this and the millions of homes that have gone into foreclosure, the government realized that something had to be done to make FHA loans more attractive to buyers. One of the methods used was to increase FHA loan limits, which means that buyers have the opportunity to purchase homes backed by the federal government, homes that are purchased with safe and affordable loans.
The problem earlier with FHA loan limits is that they were well below the average cost of homes all over the country. Therefore, the homes people were being approved for were in bad shape or in questionable areas.
The FHA loan limits are determined by your county. However, there are some exceptions to the lending minimums and maximums by counties if a home is located in specific “metropolitan statistical areas.” This means that if you find a home in a high priced metro area, that area has its own FHA loan limit, which could be substantially higher than the general area of a particular county. Your lending officer will be able to tell you the limits that a particular home resides in.
It is important to keep in mind that because the new FHA loan limits are tied to the house price index for the area it is located in, you as an average homebuyer may not be able to tell exactly how much you’ll be approved for on an FHA loan. However, it is good to know that the typical costs of homes in particular cities and metropolitan areas are taken into consideration, when this wasn’t necessarily the case in the past.
Now, with the increase of FHA loan limits, homebuyers have more options, which means homes that are otherwise sitting empty are starting to move.
Facts about an FHA Home Loan Refinance
Just as a regular FHA loan is easy to get, an FHA home loan refinance is also an easy process. For homeowners that have an existing FHA loan, the option to refinance is available. The truth is that refinancing an FHA loan offers the homeowner with many great benefits.
For one thing, the homeowner could choose an FHA home loan refinance as a means of cashing out as much as 85% of the property’s value. In this case, the homeowner would have the opportunity to consolidate bills, as well as a first and second mortgage. Additionally, monthly payments are more affordable and the person now has a single loan to manage. If you elect to consolidate other loans when you refinance, your monthly payment may end up higher, but you are paying off more than one debt at a time in this capacity. This option is also helpful for making it easier to qualify for credit because it doesn’t appear that you have a high debt to income ratio and typically, closing costs are low since they are regulated by the government.
Another top option associated with an FHA home loan refinance is taking up to 96.5% of the home’s value. In this case, the person would have the opportunity to consolidate a first and second mortgage but for this type of refinance loan, the person would not need any credit or would need a score at least 620. For this option pertaining to an FHA home loan refinance, if the person had a bankruptcy, he or she would qualify as long as it was two years old. Even someone with a foreclosure would qualify as long as it is reported at least three years old or more. An FHA home loan refinance can make life much easier with those that have little to no credit or those that are looking to improve the appearance of their credit after a bankruptcy or foreclosure.
One of the most popular types of FHA home loan refinance is known as the streamline loan. With this, the borrower has a no cost interest rate reduction, no qualification required for credit, zero cost options for refinancing, better credit qualification, and the person could switch to a shorter or longer loan term or go to an FRM from an ARM with no hassle.
To qualify for a streamlined refinance, the loan must be in good standing and by refinancing your monthly interest payments should become lower as well. The goal of this FHA home loan refinance is to reduce your monthly expenses by lowering your monthly payment. However, this refinance option does not allow you to receive cash back. This is a good choice for people that have good credit and do not have any significant additional debt. By selecting this option, the homeowner is able to save a little extra money each month.
Regardless of your reason for an FHA home loan refinance, you will find that there are various options available to you. By refinancing your home, you may be able to consolidate debt and pay it off more quickly, or you may save yourself extra cash each month that you can put to use elsewhere.
How to Qualify for an FHA Loan
When it comes time to qualify for an FHA loan, most people are surprised at how easy the process is. In fact, the guidelines for a loan such as this are extremely flexible and in most cases, a down payment of less than 5% would be accepted. Because of this, many people can become homeowners with an FHA loan that might not be qualified with another option. This is also an excellent option for first time home buyers that don’t have a large deposit to put down on a home.
To qualify for an FHA loan, there are basic guidelines set forth by the federal government that include:
• Steady employment of two years, preferably with the same company
• Two years of income at the same level or more
• Minimum credit report score of 620
• Bankruptcy should be two years old or more
• Foreclosures should be three years old or more and the borrower would need to have perfect credit from that time forward
• New FHA loan would have to have a monthly payment that is no more than 30% of the person’s gross income
Of course, to quality for an FHA loan, these basic guidelines would be followed but each buyer has a unique situation so working with a reputable lender is imperative. That way, the lender would be able to answer questions and provide options that might otherwise be overlooked. The primary goal when it comes to qualifying for an FHA loan is to help people with low down payments or past bad credit to become homeowners.
The most important aspect of going with an FHA loan has to do with documentation. To qualify for an FHA loan, the individual would have to provide the right documentation. This includes your most recent two years tax returns (including all schedules), your last two years W2s and 1099s, and your last month’s worth of pay stubs. If you are self employed, you will actually need your last three years tax returns as well as a Year-to-Date Profit and Loss statement.
In addition to your tax and payment records, you will also need to provide three months worth of bank statements for all of your account. If you have retirement accounts, such as a 401k, mutual fund, stocks or money market, you will need to provide the most recent statement from all of these accounts as well.
In order to ensure your credit satisfies the requirements for the FHA loan, you will need to supply the most recent statements from your bills. These must indicate the minimum payments and account numbers. If you rent, you must provide 12 months worth of cancelled rent checks as well as the contact information for your landlord. If you have no credit, you will simply need copies of your most recent utility bills. If you have a bankruptcy on your credit, a copy of your complete bankruptcy and discharge papers will be required.
These are just the basic qualifications and documents that you must provide. Keep in mind that each case is different and your lender may require more or less information in order to qualify you for an FHA loan.
It is really easier than you may think and the application takes about 10-15 minutes to complete with a loan decision in less than 24 hours in most cases.
What is an FHA Loan?
What is an FHA loan? Simply put, this type of loan is one that has the insurance from the federal government to protect lenders. FHA is a part of the government entity called HUD, which stands for the Department of Housing and Urban Development.Unlike conventional mortgage loans, FHA programs are designed to help certain people become homeowners.
In answer to the question “What is an FHA loan”, the answer is that it is a government-backed loan, only requires a down payment between 3% and 3.5%, a loan that is ideal for first time buyers, and a loan that can help people that have bad credit.In other words, for people that might not otherwise be able to purchase a home with a conventional loan, an FHA loan is a good option.
Another part of the question “What is an FHA loan” has to do with the various types of programs available.These loans are usually Fixed Rate Mortgages or FRMs.In this case, the interest rate being charged would remain the same throughout the life of the loan.Therefore, people have a set payment from day one, which makes budgeting a little bit easier.
These loans are also offered as Adjustable Rate Mortgages or ARMs.While the initial interest rate on this particular program is low, which means the monthly payment is also low.But, over the course of the loan, interest would increase, as would the payment amount.However, these loans are locked into a cap so if interest rates climb, interest on the loan would have limitations.These loans typically only fluctuate by 5 to 6 percentage points.For the question of what is an FHA loan, homebuyers need to have a good understanding of these two programs, choosing the one that fits them best.
Another aspect of the question, what is an FHA loan, is the rehabilitation program.For this, a property owner could take out an FHA 203K loan, which consists of money specifically for the rehabilitation of dwellings.The way this program works is that the mortgage and cost of rehabilitation are combined.Then, the amount of the mortgage would be based on the expected property value once all repairs have been completed.This program was designed to make it easier to rehabilitate homes that would improve the overall livelihood of communities and neighborhoods across the country.Instead of the homebuyer taking out numerous loans to purchase the home and make repairs, they only take out one loan to cover the rehabilitation process.
Whether you are a first time homebuyer, have less than stellar credit or simply want to purchase a home in need of rehabilitation, there is an FHA loan available to you.The application process can be made simple and there is the option of refinancing the FHA loan in the future should your current financial situation change or you want to take advantage of the home’s equity in the future.In addition, the FHA loan limits have been increased, which is allowing people to purchase homes that they may have not considered an option.
