Thursday, October 24, 2013

FHA Credit Policy Change Makes it Easier to Qualify "Economic Events" Recognized as Isolated


Effective immediately, policy changes in the way the Federal Housing Administration (FHA) views certain derogatory credit will make it easier for some borrowers to qualify for purchasing a home. Allowances will be made for certain "Economic Events" resulting in poor credit ratings, which previously would cause borrowers to be ineligible.

What do the new rules say? Potential borrowers who experienced a decrease of income by 20 percent or more for at least six months, and that resulted in serious derogatory credit such as a short sale, foreclosure, or bankruptcy, may still be eligible as long as:
  1. The loss of employment or income was due to an extenuating circumstance beyond his or her control and can be documented;
  2. A satisfactory credit history has been restored for a period of 12 months; and
  3. Housing counseling has been completed.
Other changes effective October 15, 2013 include amendments to underwriting guidelines in the area of outstanding, prior judgments and collections, including the exclusion of unresolved medical collections from the underwriting decision.

If you or anyone you know has been previously denied for a home loan based on an isolated credit incident, I may be able to help! And I'm always happy to answer any questions you may have.

After the Shutdown What's in Store for Housing and Home Loan Rates?

The government shutdown has come to an end, but how does the House's last minute deal and the post-shutdown environment impact mortgage rates?

With the debt ceiling stalemate in Washington resolved at least until February 7, 2014, rates could dip in the short term. Home builders stalled by the government shutdown will resume confidence and government-affiliated mortgages such as FHA, VA, USDA and FEMA loans will continue running smoothly.

But over the long term, mortgage rates will rise...

The Federal Reserve is committed to "taper," or reduce its recent purchases of bond buying, which it had started doing to stimulate the economy. As the economy strengthens, tapering will begin. When? Nobody knows for sure, but when it does, rates will rise--and possibly faster than consumers will be able to anticipate.

If you or anyone you know has questions related to the shutdown's impact on home loan rates, or hasn't yet refinanced their Adjustable Rate Mortgage taking advantage of today's historic low fixed mortgage rates, please call or email me today. I may be able to help and I'm always happy to answer questions!