FHA Mortgage: Whats the Best Way to Show an Underwriter that Youre Ready to Buy a House?

Home
>
Mortgage Refinance
>
FHA Mortgage: Whats the Best Way to Show an Underwriter that Youre Ready to Buy a House?

FHA Mortgage: Whats the Best Way to Show an Underwriter that Youre Ready to Buy a House?

Mortgage underwriters can be a suspicious bunch. If you have bruised or even bad credit, you have your work cut out for you. Many loan programs have guidelines that set a minimum FICO score of 620. FHA does not allow lenders to reject a loan based solely on FICO scores, but if yours is less than 620, there are probably other reasons the underwriter will find in your file to say no.

How do you prove to the underwriter that you're ready to buy a house?

Budget your income and start cleaning up the old dings on your credit report.

Payoff the minor collections, even the medical ones, unless you have a valid dispute.
Make arrangements to pay any judgement you might have and get 6 months worth of payments under your belt.
Formalize any credit dispute so your credit report reflects the dispute or you have copies of letters you have sent out.

Pay your rent on time and be able to prove it. Cancelled checks are the best proof. Letters from family members or sellers saying you're a good guy just aren't going to cut it. If you don't get your cancelled checks, then save the statements with the check numbers and the carbons.
Be able to explain what happened to your credit. Mortgage underwriters understand all about "life events". They can also do math pretty well. If you make enough money to pay your bills and you don't pay your bills, there better be a very good reason. A sincere explanation that indicates you take credit seriously works wonders.

And now, what's the number one way to prove to an underwriter that you are ready and able to afford your first house? There are four steps:

Figure out what you can afford in the way of a total Housing Expense payment. Principal, interest, mortgage insurance, property taxes and homeowner's hazard and fire insurance all add up. What's your letter to Santa Claus for a monthly outlay?
Set up a savings account if you don't already have one.
Each month, pay your rent on time and subtract the amount of your rent from the figure you came up with for your future house payment. Save the exact amount of the difference or more.
When it's time to apply for an FHA mortgage or any other type of mortgage, make a point of bringing your savings records to show that you have been "making" the payment already by placing the difference between it and your rent into your savings account each month and still paying your other bills on time.

Judi Moore authors Ask The Underwriter at 2rHouse.org and personally answers questions from readers about FHA mortgages and mortgage advice in general.

In The News:

King of How To News
No Drop in Refinancing Expected
NASDAQ
Overall mortgage lending is expected to increase slightly this year, the Mortgage Bankers Association (MBA) is predicting, thanks to declining rates that are supporting continued demand for refinancing. The MBA today upped its mortgage lending estimate ...
Mortgage Refinance in Today's Real Estate MarketKing of How To News
Refinance Applications Increase in U.S. for Third Consecutive Week, Driven by ...World Property Channel
Today's Mortgage Rates: Bank of America, Wells Fargo and PNC Bank Refinance ...Eastern Morning Herald
The Republic -Community Voice -MortgageLoan.com
all 59 news articles »

eCreditDaily.com
Time to Refinance While Mortgage Rates are So Low
FreeRateUpdate.com
After taking a look at these details, many borrowers are going to find that it is time to refinance while mortgage rates are so low even if they refinanced several years ago. For those with adjustable mortgage rates, it is the perfect time to switch to ...
Mortgage applications up on refi demand: MBAReuters
MBA Weekly Survey: Refinance Applications Increase Because of Record Low ...LoanSafe
The Truth About Mortgage Refinancing Revealed by Kansas and Missouri Mortgage ...SBWire (press release)
The Hill (blog) -eCreditDaily.com -MarketWatch (press release)
all 106 news articles »

e-wisdom.com
Realtors(R) Offer Support for Bill to Help Responsible Homeowners Refinance
MarketWatch (press release)
WASHINGTON, DC, May 24, 2012 (MARKETWIRE via COMTEX) -- A proposed bill to streamline and align the refinance processes of Fannie Mae and Freddie Mac may soon make it easier for homeowners who are current on their mortgage payments but who have been ...
Mortgage Rates: Low Mortgage Rates Remain in Place as Consumer Sentiment SoarsFreeRateUpdate.com
Freddie Mac: 30-year mortgage rate down a tick at 3.78%Los Angeles Times
Refinancing homeowners overwhelmingly choose fixed loanse-wisdom.com
International Business Times -KETK -BusinessWeek
all 315 news articles »

The Mortgage Reports (blog)
The Truth About Mortgage Refinancing Revealed by Georgia Mortgage Expert
SBWire (press release)
Atlanta, Georgia based Mortgage Broker Brad Hartman reveals mortgage refinancing secrets, offers free reports, a home buying guide and free mortgage calculators on his website, brad-hartman.com. The site is designed to give Georgia residents all the ...
Real estate industry pushes Senate on refi billMarketWatch
Push intensifies to pass home-loan refinancing billThe Hill (blog)
Q & A : Why Won't My Bank Do HARP Mortgages With PMI Or LPMI?The Mortgage Reports (blog)
FreeRateUpdate.com -Cleveland Jewish News -Seeking Alpha
all 13 news articles »

Mortgage rules prove too strict for some retirees
Washington Post
Jim Eberle of McLean found this out the hard way when he applied to refinance his mortgage. After spending much of his career working for banking industry trade associations in Washington, Eberle, 68, decided to take advantage of this spring's ...

and more »

Mortgage Origination Forecast Increased by Nearly $200 Billion by TSA
LoanSafe
MBA now expects that mortgage originations will reach $1.28 trillion in 2012, up from $1.26 trillion in 2011. Refinance originations are now expected to total $870 billion in 2012, an almost identical amount to 2011. MBA is slightly lowering its ...
2012 Originations Now Expected to Exceed 2011Mortgage Daily

all 2 news articles »

Obama's Disclosure Shows Mortgage Refinance Not High on Agenda
San Francisco Chronicle
Rates for a 30-year fixed mortgage averaged 4.46 percent last year, according to Bankrate.com data, hitting a low at the end of the year of 3.92 percent. In 2011, 4.3 million homeowners refinanced, according to data from the US Department of Housing ...

and more »

Politico
Obama to tout success of mortgage refinancing
Washington Post
In addition, he cited a program Obama announced in October 2011 designed to remove barriers to refinancing to homeowners with federally backed mortgages. Now, it is up to Congress, Donovan said, to expand such programs to homeowners with loans that are ...
Obama touts mortgage refinancing to help economic recoveryThe Hill (blog)
Obama Visits Reno, Urges Congress To Expand Mortgage Refinancing ProgramCarson Now
In Nevada, Obama touts his housing crisis effortsLos Angeles Times
Politico -CNN (blog)
all 599 news articles »

Chicago Tribune
Costco members can now shop for mortgages online
Chicago Tribune
Mortgages? Well, not exactly. The company is receiving a fair amount of publicity for the rollout on its website of a home purchase and refinancing mortgage product for members. But technically it's not Costco's program. It's an online mortgage ...

e-wisdom.com
Mortgage refinancing applications jump; rates fall: MBA
Chicago Tribune
NEW YORK (Reuters) - Applications for US home mortgages surged last week, driven by increased demand for refinancing as interest rates hit fresh lows, an industry group said on Wednesday. The Mortgage Bankers Association said its seasonally adjusted ...
Mortgage refinancing surgesBizjournals.com
The Truth About Mortgage Refinancing Revealed by Pennsylvania Mortgage ExpertSBWire (press release)
Mortgage applications increase on jump in refinancingThe Hill (blog)
LoanSafe -LoanRateUpdate (press release)
all 120 news articles »

Google News