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Old 03-21-2012, 12:57 PM
 
3 posts, read 6,322 times
Reputation: 13
Default FHA qualification questions

I am in the beginning stages of considering a home purchase. I would like a couple of questions answered in regards to FHA loans and what rate to use to calculate what payments would be.

My wife and I are considering a home purchase via a FHA loan. I have between a 644 and 658 range and my wife a 684 and 693 range of FICO scores (per identityguard.com). How will those scores affect our application for a mortgage? I am on SSD and have for ~3 yrs now. That would be our source of income.

The 2nd question is that I want to figure out how much home I could afford based upon what the payments would be. In a mortgage calculator, do I enter the APR or the rate that is shown on the "advertisements" for FHA loans? Once I find the monthly payment that I can afford, I can see the value of the home that I can buy with the down payment I have available.


Thanks again!
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Old 03-21-2012, 01:04 PM
 
Location: Plano, Texas
1,672 posts, read 4,340,283 times
Reputation: 640
Lenders have overlays for minimum score to qualify for a fha loan. Most lenders require a 620, but there are a few that go to 580. So, your fico score is high enough to qualify.

You would enter the interest rate...but dont forget to add in taxes, insurance and the monthly mortgage insurance payment. Currently, the MI would be 1.15 per year divided by 12. so, if 100k loan, the mi would be $95 per month. The MI factor is increasing April 9th to 1.25 which would increase monthly mi to $104
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Old 03-21-2012, 01:53 PM
 
Location: New York
1,092 posts, read 2,072,762 times
Reputation: 685
Good Advise Victor...


We don't know what state to OP is in, Premiums in Wisconsin, Illinois, Minnesota and Florida have changes coming... FHA will increase its annual mortgage insurance premium (MIP) by 0.10 percent for loans under $625,500.

Effective April 9, 2012 Upfront premiums will increase by 0.75 percent.
Annual Premiums:
LTV Ratio Annual Premium for over 15 Years and up to 30 Years 95.00% and Under = 1.20%
95.01% and Over 1.25%
90.01% and Over 0.60%
90.00% to 78.01% 0.35%
78% and under 0.00%

How long will I have monthly FHA mortgage insurance? Years will be determined when the loan balance equals 78% of the initial sale price or appraised value, which ever is lower, provided the mortgagor has paid the annual mortgage insurance premium for at least 5 years.

A sales line is "oh it can drop off in 5 years", if you use an appraisal company that the mortgage company selects. That appraisal company will be very conservative.

How much can you afford - here a link to City Data's Calculator -
http://www.city-data.com/mortgage-calculator/?calc=2

Note - you still need to add the home owners insurance....
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Old 03-21-2012, 02:00 PM
Status: "Back on the sunny side of the street!" (set 19 days ago)
 
Location: Richardson, TX
6,562 posts, read 9,920,780 times
Reputation: 13000
Quote:
Originally Posted by Modification Specialist View Post
Good Advise Victor...


We don't know what state to OP is in, Premiums in Wisconsin, Illinois, Minnesota and Florida have changes coming... FHA will increase its annual mortgage insurance premium (MIP) by 0.10 percent for loans under $625,500.

Effective April 9, 2012 Upfront premiums will increase by 0.75 percent.
Annual Premiums:
LTV Ratio Annual Premium for over 15 Years and up to 30 Years 95.00% and Under = 1.20%
95.01% and Over 1.25%
90.01% and Over 0.60%
90.00% to 78.01% 0.35%
78% and under 0.00%

How long will I have monthly FHA mortgage insurance? Years will be determined when the loan balance equals 78% of the initial sale price or appraised value, which ever is lower, provided the mortgagor has paid the annual mortgage insurance premium for at least 5 years.

A sales line is "oh it can drop off in 5 years", if you use an appraisal company that the mortgage company selects. That appraisal company will be very conservative.

How much can you afford - here a link to City Data's Calculator -
http://www.city-data.com/mortgage-calculator/?calc=2

Note - you still need to add the home owners insurance....
On FHA loans, the MI is dropped based on the original appraisal or sales price. There is no new appraisal option to drop MI.
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Old 03-21-2012, 04:57 PM
 
3 posts, read 6,322 times
Reputation: 13
Thank you. I was looking for general information which was provided. I am in New Mexico and will be looking in the El Paso, TX/ Las Cruces, NM area.

With the basic "which rate should I use to calculate the monthly payment?" answer, I can now try to find what I will pay each month to get to the "no more than 25% of your monthly income on house payment" zone.
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Old 03-21-2012, 08:24 PM
 
3 posts, read 11,256 times
Reputation: 10
Here is a great calculator that is very accurate. We use it all the time (We are in the home buying process as well).

Good Luck!

How much money can I borrow calculator
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Old 03-22-2012, 11:05 AM
 
Location: New York
1,092 posts, read 2,072,762 times
Reputation: 685
Quote:
Originally Posted by nmbatman99 View Post
Thank you. I was looking for general information which was provided. I am in New Mexico and will be looking in the El Paso, TX/ Las Cruces, NM area.

With the basic "which rate should I use to calculate the monthly payment?" answer, I can now try to find what I will pay each month to get to the "no more than 25% of your monthly income on house payment" zone.
Answering your question "which rate should you use to calculate the monthly payment?" Simply depends on who you choose as a lender. It's a common misconception, but in fact, the FHA is not a lender. Nor does the FHA give people money to buy a home or set interest rates on home loans. Rather, the FHA, or Federal Housing Administration, is a federal government agency that offers mortgage insurance (PMI) on loans originated by lenders that are approved by the agency. This insurance protects the lender in case the borrower defaults on the loan.

Looking at the values in El Paso - it is a buyers market. Link - El Paso Real Estate & El Paso TX Homes for Sale - Zillow


I do not know your situation - but summing up what you said on your first post. Looking at a FHA loan, you on Social Security Disability (fixed and only income).

I do not recommend you doing an FHA loan, because they are the least forgiving type of loans if you get into financial trouble.

The amount of time to raise you credit score and save up more to put towards a deposit.Sso you can qualify for a conventional loan, with a cheaper payment. So that you are spending less each month. Compared to finding out if you qualify to get a FHA loan, with little as possible for the deposit. Getting into a FHA loan you will pay out more.

I'm sure you heard a lot about mortgage modifications. Every day I speak to home owners behind on their payments, struggling to save their homes from foreclosure. An FHA loan compared to a conventional loan, is least forgiving if you go behind more than a few months. The past due payments get rolled back into the loan making the balance larger.

Most FHA loans now days rates are around 6%. The completed modifications for FHA loans, banks are giving is 5%. So if you get into trouble, go late, and want to save the home, because the mod results in a higher payment. You delaying the inevitable that your going to go late again.

I'm not trying to scare you, just warn that you might be rushing to get into a ticking time bomb. What if your payment went up due to higher insurance or taxes? Being on a fixed income with little reserves, if you have an emergency. Realize you may be in a situation in the future that is not reversible.


Good Luck....
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Old 11-27-2012, 09:35 AM
 
Location: Pacific Northwest
135 posts, read 178,103 times
Reputation: 161
This might be a bit late, but I can offer my experience. My partner and I are looking to buy our first home. I talked with a real-estate, mortgage writer. He said I can qualify for a disability loan no down & 4% interest. We are just waiting for my partner's hours to get up to at least 30. This is the prime time for us, houses have to be safe, sanitary and move in condition. There are many houses under $200,000 and our mortgage will be around $575 a month, at least $200 in saving from rent. We pay $890 for a four room mil unit.

I've been looking at houses, one that sticks out is $154,000 3 bedrooms in the main house, and an mil until in basement. Mortgage would be $564. It's on 15,000 Square feet, and should be choose we can have 8 dwelling units. We don't plan on it, we will rent out the mil, perhaps someone wants to build a house, we will consider leasing the land. It would still give us a huge backyard. Beautiful trees. My score is 706, lower because I have no debt. My partner had to file bankruptcy 8 years ago because I got sick. Still here is up to 675. I suspect people will start buying houses again in the not to distant future. Why rent paying $100's more? It's a good time for first time buyers, the banks are starting to loosen their belts with a glut of houses held in their possessions they need too. This is one of the main factors in economic recovery.

Real estate pro's correct me if I ahve anything wrong (:
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