FREQUENTLY ASKED QUESTIONS (FAQ’S)
Do I need to show my income?
Yes. An FHA mortgage requires that you show your income to qualify. If you have issues with proving your income one option would be to have a Co-Borrower (Co-Signer) to prove the adequate income.
I don’t have perfect credit, can I still qualify for a mortgage?
It depends. Although FHA mortgages typically require that you have a 580 credit score, sometimes they allow a score as low as 550. Additionally, you will typically need to show that your mortgage payment has been on-time for at least 6 months (or if it was late, it was AFTER your adjustable rate mortgage re-set and your rate went up). Open collections that are over 1 year old typically will not need to be paid and some late consumer payments are typically allowed on a case-by-case basis.
I am on a Fixed Income. Can I still qualify?
Yes. As long as your fixed income can be proven to be consistent over the next 3 years FHA will have no problem using it.
Can I get a Co-Signer?
Absolutely! This will typically be needed if you have problems proving your income. A Co-Signer will typically need to be either a relative or an individual that you have had a long standing relationship with. The only issue that you need to consider when using a Co-Signer is that you not only need to show their income but you need to show their debts. You can have multiple Co-Signers, but when we calculate the income and debts we need to lump all of you together.
I live in a condominium, is this a problem?
It depends. Your condominium complex needs to have at least 4 units (3 and under will not qualify). Also, you will need to check your Condominium By-Laws to make sure that they do not contain a provision that is called a “Right of First Refusal.” A Right of First Refusal is a provision that allows the association to match any legitimate offers on a unit with an offer of their own to purchase the unit. The reason that FHA will not allow this is that this type of provision can be considered discriminatory, and they will not lend in a Condominium Complex that retains discriminatory provisions within their By-Laws. Additionally, your Association will need to have minimum funds for reserves and can not be a party to any type of pending litigation.
Do I need
to escrow my taxes and insurance?
Yes. FHA mortgages require that Taxes and Insurance are escrowed in the monthly payments.
What
if my 1st mortgage is higher than the FHA mortgage loan limit?
If you first mortgage is higher than the FHA mortgage loan limit it will be very difficult to refinance. This doesn’t mean that it can’t be done, it is just very difficult. In order to refinance this type of mortgage we can either work with you and your lender to have them write off the difference, or if your 1st and 2nd mortgage are held by the same lender we can have them increase the 2nd mortgage to include the funds that your current mortgage is over the limit.
I was told by another lender that “His” appraiser would be able to get the correct value for a standard refinance.
Is this something that you can do?
We hear this quite often. Up until recently, this was a very common practice. This is actually one of the main reasons that our Country is in the mess that we are in! Mortgage Lenders would have their Preferred Appraiser “Stretch” the appraised value so that they could get the necessary mortgage. This practice was actually the main culprit in rising home prices. Today, ALL lenders have what is called an “Appraisal Review Process.” This is a process in which the underwriters actually look up their own comparable properties to ensure that the appraiser used the best comparable properties available. The underwriters actually have the right to lower the value if they believe that the appraiser intentionally left out unfavorable comparable properties. In addition to this, if an appraiser is found to be inflating values they will be “Black-Listed” by Lenders and they stand to lose their licenses. The bottom line is that appraisers are no longer inflating values like they did in the past.
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Tim E. – Wichita, KS
“I was told by 3 other lenders that I couldn’t refinance because I was upside
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