It is certain, more now than ever, that the FHA program is the foremost program sought after by Texas residents looking to purchase or refinance.
FHA loans are an integral part of the government’s new legislation to reform and improve current mortgage lending standards. For the most part, current conventional home loans have more strict guidelines on credit, cash reserves and down-payment than many would-be homeowners would like to adhere to.
With FHA being a financing vehicle that is openly endorsed and actually financially secured by the United States government and HUD (Dept. of Housing & Urban Development), homeowners have a safe-haven to firmly lace your trust. The fact is that HUD guarantees a portion of your loan to the lender when you finance through the FHA program.
Put in simple terms, this means that the lender is able to allow lower credit scores, down-payments and overall allowances that they would not consider on a conventional loan because they are securitized by government funds and guarantees.
With the advantages to the FHA program in mind, applying for an FHA Loan in Texas has changes that need to be addressed. Due to changes in Texas real estate market conditions and the balance of the banks’ and homeowner’s needs, all major FHA lenders have changed their requirements on new purchase and refinance loans. The reason for the changes allow the FHA program to still offer rate that are very similar to conventional loan with much more relaxed guidelines.
First of all, they have changed their required down-payment from 3% to 3.5%. Secondly, they have required that a credit score of 620 be maintained by anyone looking to include income to the purchase or refinance of the property. This means that if you have three credit scores from the three credit bureaus (Experian, Equifax & TransUnion) the score that is in the middle of the high and low scores must be at least a 620.
With the current guideline changes, FHA has also rejuvenated and pushed to the forefront new opportunities through their financing. The FHA Streamline refinance is the best way to capitalize upon current historically low interest rates without having to re-qualify with income and assets. Loan companies requirements are only that you must have paid the last 12 months mortgage payments without a late reported to credit, that you have a verifiable job and that you maintain the required 620 score.
Another underutilized and almost secret program that is being used in Texas is the FHA 203K, also the Streamlined 203KS Program. This allows for the purchase or refinance of a property with the ability to finance light to semi-light renovations up-to $35,000 in your loan for updates and repairs. This is an easy way to convert the home that you currently own or would like to purchase (including foreclosed homes that may need some work) into the condition that you want. You can turn just an ordinary house into a home that you and you loved ones could live in for years to come.
Only a trusted mortgage professional should advise you on FHA financing.
Comments are closed.