Chapter 13, FHA loan Requirements

Financing, Hard Money Lenders, Private Money
1

I have been house hunting as I found a HML who would do 20% down 5 points and 7.9% because I have a middle score of 684.

However after talking to a new real estate broker today, he informed me that FHA guidelines have changed and since my BK13 is now 12 months old (I filed in Nov 2013 and started my first payment in Dec 2013 and plan finalized in May 2014), I can qualify for FHA 3.5% down loan with a 3.25 rate and PMI is 1.75% of the loan.

So now if I can, I want to switch gears in what I was looking for. I feel I still go with at least 10% down if I could get FHA.

On the website it states, you need to summit reason for BK13. Mine is b/c I had a mortgage foreclosure on a preconstruction home in 2007. It is way past the 3 yr requirement but the wage garnishment hit in Nov 2013. Also in June 2013, my primary was in foreclosure (I was upside down over 200K with a I/O loan) and with help from lawyer we gave home back (deed of lieu you can say). NO MORTGAGE’s that report negative are on my credit. only older positive ones that were sold off.

I know Deed of Lieu has a bearing but since mortgage not reporting anymore, can I bypass that rule.

Whats chances of an FHA??

2

The best answer to your question is to actually go down to a lender and see if you can get qualified for a FHA loan.

Because you would be putting less than 20% down, you will be required to pay mortgage insurance. FHA has an upfront fee of 1.75% which is wrapped into your loan and a monthly fee of 1.30 % if the original loan amount to value is less than 95% and 1.35% if you put less than 5% down.

Typically, once you reach a 20% equity position, the PMI is removed. Not so with the new FHA loan changes. The insurance stays on your loan for the life of the loan for all new loans starting in June 3, 2013.

For example, if you are paying $112.50 (borrowing $100,000) per month in mortgage insurance and you pay the mortgage for the full 30 years, you will have paid $40,500 for insurance that benefits the lender.

Make sure you weigh the long-term costs to the short term benefits before you go get a loan.