FHA homes are a great option for first time home buyers. However, there are many homeowners who want to buy a FHA home but cannot because they have bad credit or have purchased an FHA loan on a property that later turned to be foreclosed upon. This is a common problem in the housing market. Unfortunately, many times people that purchase FHA homes do not end up paying the mortgage back. Many of these individuals wind up with a large amount of debt on their credit cards and in some cases, bankruptcy has even been filed because of the debt that was incurred due to the FHA loans.
There are several reasons why people have a poor FHA credit history. It may have been something that happened when the individual was young or it may be something that has continued over time. In some cases, the credit issue has nothing to do with the ability to pay back a mortgage loan. When individuals apply for a mortgage loan, their credit history is checked to make sure that they can repay the loan based on income and current expenses.
Sometimes people have low credit because of mistakes or clerical errors on their mortgage application. Errors can occur during the initial application and after closing. If you find an error on your mortgage application, be sure to notify your lender immediately. Find out what your options are for repairing your credit. In some instances, a letter of dispute can help you correct an error on your credit history. However, in many cases, there are no errors, but a late payment will cancel out any payments that have been made on time.
Sometimes individuals with bad credit history have purchased FHA homes that later became foreclosed upon. Many times, this is due to not keeping current with mortgage payments. These individuals may be required to go before a judge and explain the circumstances surrounding the default. The judge can order them to make sure that payments are made on time, or he can issue a bench warrant for their arrest.
An individual with poor credit can still qualify for an FHA home loan, even if their credit history is less than perfect. It is important for you to understand how your mortgage affects your credit history. If you have made late payments on your FHA home loan, they are reported to the credit agencies as a deficiency balance. This is also known as a deficiency fee and is reported to the three credit agencies along with all other accounts that are in collections.
Your credit history is a valuable asset to you. If it is good, then you have no need to worry about being denied a mortgage. However, you should know that your credit history will not be as good if you make late payments on your FHA mortgage. You need to make sure that all of your credit accounts are current. The lenders use your credit history to determine the amount of risk you present when you purchase a home. If you have poor credit history, then the chances of purchasing a home are slim.
On the other hand, if your credit history is good, then you have a much greater chance of being approved for a FHA home mortgage. These loans are specifically tailored to assist those with bad credit histories. Even though there is a higher risk involved with these mortgages, they still help those people who would otherwise be unable to purchase a home.
In order to ensure that you are getting the best rate possible, you need to shop around. You can go online and request free mortgage quotes. Make sure that you find a reputable mortgage company and that they provide you with accurate information. Always make sure that you are comparing apples to apples, meaning that you’re looking at the same thing, the terms, interest rates, and loan amounts.