This makes FHA loans sound to EASY. This is extremely misleading...
I must digress... this post was just sent to me. FHA loans have no minimum credit score for Florida Homeowners -
From reading this post, the author makes it sound very easy to obtain FHA loans with less than perfect credit. The author states this - "At the same time FHA loans to (do) not penalize Florida buyers with a higher interest rate because of having less then perfect credit."
Much of the information above and in the post is extremely misleading. I would consider this as a FHA mortgage myth per se. Let me break it down for you.
Misleading info about FHA Loans :
FHA mortgages don't have minimum credit score requirements. Okay, this is actually true, there is no minimum credit score from FHA. But many lenders have minimum credit scores. And FHA does state that if you have a credit score below 580, that you would need at least 10% down. FHA mentioned this in Mortgagee Letter 2010-02... I wrote about it here. FHA mortgage changes with down payment and credit scores. .
Let me take this one step further. Many lenders won't go below a credit score of 620. Yes, there are a few lenders that will do credit scores from 580 to 619, but you need to be very very careful when promised this kind of loan. First off, they are much more difficult, that the guidelines are much tougher. Secondly, the interest rates and fees are usually much higher, sometimes up to 1 percent more in interest rate with points. And I have come across many borrowers in the last 6 months that were promised a FHA loan with less than a 620 score and many of them never closed. Again, not saying that it can't be done, but it's not easy.
Summary : Overall, this kind of post with the information is very misleading. Here is another statement from that article.
Easier to qualify: Because FHA insures private Florida mortgage lenders, FHA lenders are more willing to give you loan terms that make it easier for you to qualify.
More willing? Okay, getting an FHA loan can be easier sometimes than getting a conventional loan. But this statement makes it seem like it's easy. Each borrower is different, not one borrower being the same. You need to work with a very good professional loan officer. I currently have a borrower with a 637 credit score who was first pre-approved in the first week of May 2010. She just received this from the lender.
"I'm sorry I was out of my office all day today. The reason a commitment hasn't been given is because your credit score does not meet the required score needed to get the loan"
Wow.. rut row... this lender knew about this same credit score back in May, and now she is just saying this? I told the client that I can help. It's not an easy deal, but I have been helping her get all her ducks in a row in the last 10 days. We are ready to proceed.
My point? Just because someone promises you a loan, gives you a pre-approval letter, or even a commitment letter, it does not guarantee you a FHA loan. Yes, FHA loans with less than perfect credit and lower scores (620 or higher) can happen, but not everyone can handle these types of loans. Mortgage Myths or misleading mortgage information is out there, just be careful. Do your research carefully.
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For more information on FHA loans, please go to this link. The FHA Expert
For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!
For information about FHA myths & FHA rumors, please read : FHA Myths & Rumors
Copyright © 2010 by Jeff Belonger of Infinity Home Mortgage Company, Inc
Ironically, my daughter tells me they have good salads... Really? Who goes to a restaurant called The Cheesecake Factory for a salad? Well, she wasn't kidding. I checked the menu online this morning and it IS a full-service restaurant that does, indeed, offer salads. In fact, the menu is 20 pages long, so they obviously serve a LOT more things than cheesecake, in spite of the name!
