If you’re looking into applying for an FHA mortgage loan, there are some things you really should know first. This article explains the pros and cons to FHA mortgage loans and expels some of the common myths involved.

For low-income and bad credit borrowers, the FHA’s mortgage loan program can sound like a dream come true. Many borrowers have heard that the FHA won’t look at your credit, needs less money down, and approves applicants that other banks won’t. What are the facts and what are the myths? Read on to find out.

Fact or Myth #1 – The Government Loans Money

The first common myth of FHA loans is that the US government’s Federal Assistance Mortgage (FHA) program actually loans out money. This isn’t the case.

An FHA loan is simply a bank/credit union loan that is backed by a guarantee from the government. If you fail to pay the mortgage, the government guarantees that they will repay the bank instead.

Because of this guarantee, the bank’s lending requirements are much looser, because they’re taking less risk.

Fact or Myth #2 – Your Credit Doesn’t Matter

This is a half myth, half truth. While the FHA won’t base your loan on your FICO score, your credit history is still important.

What the FHA is looking for is a solid history of at least 12 months, where the borrower has made all his payments on time. Instead of looking at just your credit report, the FHA may also look at your phone bills, rent history, utilities, among other bills to demonstrate your credit worthiness.

You also get the chance to demonstrate why you may have a bad credit score. For example, if you have an outstanding history of making on-time payments up until a medical emergency, and since then still managed to pay your consumer debts, you may still qualify for an FHA loan.

Fact or Myth #3 – An FHA Loan is a Better Deal

While it’s true that an FHA loan entails less risk for banking institutions and therefore they can charge less, an FHA loan may not always be a better deal.

The FHA is designed to be a self-sustaining institution, and therefore has to make money as well, in the form of insurance paid to the FHA.

For low income or bad credit borrowers, FHA backed loans are almost always the better deal. For medium income or average credit, research and comparison is necessary to be sure whether FHA is for you or not.

To learn much more about FHA Home Mortgage Loans or to see about getting a Home Mortgage Loan Quote, visit us at http://www.gethomemortgageloan.com/

By Josh Spaulding Published: 11/6/2007

Bidding Wars for First Time Home Buyers | First Time Buyers Tips

Steve Howe is a First Time Home Buyer Specialist working with the Minnesota Real Estate Team. If you have questions about owning your first home, or would like to get more information about the process, fill out the contact form.

FHA Loan Limits for 2009 | FHA Mortgage 

Mpls/St. Paul, MN 2009 FHA Loan Limits The 2009 FHA Loan Limits in Minnesota have taken effect. 

FHA loans allow for non occupying Co-borrowers In Minnesota 

FHA loans allow for non occupying Co-borrowers In Minnesota. By mnmediamogul. http://www.ventureloanapp.com FHA loans are unique in that they allow for a co-borrower who is not an owner occupant to qualify for a loan with the owner.

FHA Loans in Minnesota

Why would someone prefer a FHA loan or Conventional loan I was asked by a client this week. Great question, since FHA loans had virtually disappeared as an option for Minnesota first time home buyers until a year ago.

Best bet for a home loan now

Until this year, FHA loans were capped so low that the program was out of step with the real price of a house. But in February 2008, the ceiling in the highest priced markets went from $362790 to $729750. That amount is scheduled [...]

Default rate rising among FHA-backed loans – TwinCities

Several experts who track the agency attribute the rise in defaults to a batch of bad loans made in 2007, when the subprime market was faltering and borrowers with spotty credit were shoehorned into FHA loans instead. Of the 1.78 million FHA loans made in the past two years, more than 1 million were originated in 2008, agency data shows. 

Real Estate – FHA 203K Full Rehab Loan-Minnesota Mortgage 

We have sourced and found an investor who will fund an FHA FULL rehab loan. This loan is a little more complex than the 203K streamline or "lite" product that is limited to 35K. 

If you have bad credit, attempting to refinance your mortgage loan can prove to be a frustrating, maddening and even a humiliating experience. You would love to take advantage of a refinance in order to lower your mortgage payments, but find it difficult because your credit score is just too low. It is tempting to give up, but it is not necessary, because there are ways to refinance your mortgage loan even with bad credit.

Before you begin your quest to obtain refinancing for your current loan with poor credit, consider two things. First, consider using a mortgage company that specializes in bad credit mortgage financing. Secondly, do whatever you can to clean up your credit report before you attempt to refinance your loan.

Because traditional lenders may shy away from refinancing individuals with poor credit scores, it might be a good idea to find a lender who specializes in bad credit refinancing. However, it would prove wise to try traditional lenders first, while avoiding lenders that you know very little about. Often times, traditional lenders have special programs for individuals with bad credit ratings.

Lendingtree.com would be a good example of this, because they are a traditional lender with a special program for people rebuilding their credit. You can get a free quote with no obligations. Do note, however, that you will end up paying higher interest rates when you refinance with whoever you choose to refinance your loan with due to a low credit score.

Another important step in securing a bad credit refinance is to fix any credit problems that you can. This will increase the likelihood of you receiving better terms. Obtain a copy of your credit report from the ‘big three’ credit bureaus. Scan it carefully and look for any mistakes.

If you find any, notify your creditors or the bureaus immediately. Also, if possible, try to pay down any credit cards that are near their lending limits. This makes you look better to the mortgage lender. Remember, just do what you can and then carefully and methodically research possible mortgage refinancing companies.

Refinancing your mortgage loan with bad credit can be a frustrating experience. However, like with most things, a little patience, persistence and resourcefulness will bring you closer to finding refinancing terms that work well for you.

By: Anthony S. 

For more information on getting better Mortgage Rates and great money-saving Mortgage Lender tips, and resources, visit www.lenoxnationalmortgage.com