Are FHAs the best loan for 2+ years out of BK?

[MTG_BANKER_OH]

How is it better than the fannie mae deal, without the down payment requirement and lower insurance?

The My Community loan is superior to FHA if your credit is decent and can get a straight approval through the automated underwriting system that does not call for a higher risk level to your loan. Downside is income limits and mortgage insurance is higher if you do not get a straight approve through the automated underwriting system.

FHA is good for the manual underwriting it is not score driven it is credit driven. You could have a 500 score and get approved with a rate in the 6's on an FHA loan. The major downside is the 3% downpayment requirement, which you can get from the seller, but you usually end up paying 3% more for the house. The 1.5% upfront mortgage insurance premium that is not refundable. And they are a little more stringent on the condition of the home, which can be good and bad at the same time. If the seller does not want to fix it can be a deal breaker. They have lookened up on these requirements over teh past couple of years.

[Elf]

Greetings Nick!

We finished a three year plan two months early because we increased our monthly payments to cover summers when we had no income. That put us a bit ahead. We filed in May and finished payments in November. We needed to move over the summer, and we thought that we'd be okay as we were finished. We found a house in June and settled in August 06. We didn't get the discharge until November-- so 10 months our from the last payment that we needed to make. We probably didn't get the best rate-- but we were pretty happy to get any rate without an official discharge.

Of course, coming out of a BK, we had no money, so we had to finance the whole thing. It was a zoo. We've been in the new place for a year and eight months at this point.

No prepayment penalties.

Thank you!
Elf

[Mortgage Guru]

Say Nick - can you comment on this? I left it in another topic i this forum hoping you would see it - Thx.

"I've been told that with certain hardship cases, particularly when a severe medical situation is present, that FHA can waive the two-year requirement for being post bk to 1 year, and provide standard rates (depending on how you've performed since."

Yes its true but they will look at the reason for the Bk. death of a wage earner is the best I have ever done 5 months out of the BK on FHA, Best bet go for FHA 3% down and keep the 17% balance as reserves. 17% reserves is a big compensating factor we look for. remember 95% of mortgage broker can't write FHA. (Down playing the program is a big red flag)

Rates are the same pretty much give or take an 1/8