Nearly a quarter of a million more families could be eligible this year to purchase or refinance their homes using FHA-insured mortgages, due to a temporary lifting of loan limits. The Economic Stimulus Act of 2008 will allow HUD’s Federal Housing Administration (FHA) to temporarily increase its loan limits and insure larger mortgages at a more affordable price in high cost areas of the country.
Beginning today, HUD will offer temporary FHA loan limits that will range from $271,050 to $729,750.The maximum amount of $729,750 will only be applicable to extremely high-cost metropolitan areas such as: New York, Los Angeles, San Francisco and Washington, D.C.
Will an FHA loan help you?
FHA loans aren’t government loans. Private lenders make these loans, but they are insured by the federal government. They feature low down payment requirements, but they will not work for you if you cannot document an adequate stable income or if you owe more than your home is worth.
Spouses with very different credit scores seems to be a popular topic for our Ask the Expert column. Here’s what “Marissa” writes:
I recently got married last year, and my husband and I are hoping to buy our first home this year. (We are currently renting.)
My husband’s credit score is very good, yet my credit score is extremely low from mistakes made with my finances in my early twenties.
I have several credit card accounts that were closed by the credit card company and turned over to a collection agency. Within one (1) year of the accounts being closed I paid off all the collection agencies and have been debt free for almost two (2) years. Yet, my credit score is still very low.
How will my past credit history effect my husband and I in getting a mortgage loan, and what are some ways I can improve my credit to help with this process?
First, Marissa, as you may have discovered you and your hubbie have different credit scores. Your credit reports are completely separate, except for any joint accounts which should appear on both your credit reports. It’s perfectly OK to keep your credit separate, especially while you work on rebuilding yours.
As far as the mortgage goes, if your husband is the primary wage earner, or can qualify for a loan based on his income and credit qualifications alone, he can buy the house and simply add you to the title. (In fact, in most cases, the house will be titled jointly anyway).
If you are the primary income earner, then your challenge is greater because the lender will want to qualify you based on your credit scores. Talk to your loan officer once you use FreeRateSearch to search, as you may find a program that fits your situation sooner than you realize.
You also said you want to clean up your credit. It’s great that you have settled everything, and it doesn’t sound like you have any outstanding issues. However, as you have learned, paying off collection accounts doesn’t help your credit score. Collection accounts are still negative as long as they are on your reports.
I assume you have your three-bureau credit reports. If not, get them from AnnualCreditReport.com. You should be focused on two things: 1. Making sure everything is accurate and complete and 2. Building positive new credit references to outweigh the old negatives.
If there is anything inaccurate or incomplete about the way your collection accounts are being reported, you have the right to dispute those errors with the credit reporting agencies. If the information cannot be confirmed with the source (and it may not be, given you settled these debts a couple of years ago), the listing must be removed.
Secondly, you should have at least two current, active, positive credit references on your credit report. If you don’t, you may want to ask your husband to add you on to one of his accounts as a joint accountholder. Choose a major credit card with a long positive payment history and a low balance. Once it reports to your credit, you’ll benefit from the entire history on the account.
For more strategies, please visit the FreeRateSearch.com Information Center where I have published several articles about credit and credit scores.
Let us know how it goes!
Posts
