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Don't Disqualify Yourself...52% of Approved Loans Have A FICO Score Under 750

by Keeping Current Matters

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Slaying Myths About Home Buying

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Is an FHA-Insured Mortgage Right for You?

by Samia S. Morgan

The days of putting little money down to buy a home aren’t over.

After years of risky mortgages backed up by small down payments, most lenders aren’t underwriting mortgages without a significant sum up front and a high credit score. But a decades-old loophole can still put home buyers in a house for next to nothing. Mortgages insured by the Federal Housing Administration (FHA) allow borrowers to get approved with a down payment as small as 3.5% of the agreed selling price of the house and don’t require a high credit score.

As millions of Americans have come to realize, getting into a house for little money down has its disadvantages. Borrowers who’ve pumped little equity into their home are often more willing to walk away from it during lean times that keep them from making payments; this risk is further elevated when home values are in decline and troubled borrowers are unable to refinance or sell the home at a price that covers their losses.

Still, FHA-insured mortgages are far less risky than the subprime mortgages that lenders originated before the housing bust. FHA-insured mortgages require documentation and verifiable proof that the borrower is capable of making their monthly payments. (Most subprime mortgages didn’t require such proof.)

The looser terms of FHA-insured mortgages have helped make them more popular. Today, FHA-insured mortgages make up about 25% of the mortgage market, up from 3% in 2006, FHA commissioner David Stevens said in a speech earlier this month. In June, the FHA insured 194,000 loans – the highest monthly total in the agency’s history, according to Stevens. For fiscal year 2009, the dollar amount of FHA-insured mortgages is likely to reach 30% of mortgage originations, up from around 4% in 2005 and 2006, says Stu Feldstein, the president of SMR Research, a mortgage-data tracking firm.

“FHA-insured mortgages are one of the only games in town, especially if you can’t qualify for a traditional mortgage,” says Gibran Nicholas, the chairman of the Ann Arbor, Mich.-based CMPS Institute, which trains and certifies mortgage lenders and brokers. “Now that the subprime market is gone, FHA is filling the gap.”

Your Credit Score - What You May Be Doing Wrong

by Samia S. Morgan

When buying a home, or any large purchase for that matter, it is important to familiarize yourself with your credit score and the role you play in reaching this score . It is your FICO score that will indicate to lenders if they  should lend you the money, charge you more, or flat out reject your request for financing.

Don't defeat yourself before you get started. The article 6 ways to kill your credit score has some invaluable information about how we can sabotage our own credit and sometimes without knowing it.

Stay on top of your credit score and review your credit report regularly. This will limit the potential for errors that can also negatively affect your FICO score.

Displaying blog entries 1-5 of 5

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Photo of Samia S. Morgan, Inc. Real Estate
Samia S. Morgan, Inc.
dba Samia Realty Group
BRE# 00967165
San Mateo CA 94403
650-678-3633