Thursday, April 26, 2012

Pay Your Debt For FHA Loan

Getting a mortgage backed by the Federal Housing Administration is about to get a lot tougher for those with $1,000 or more in debt in collection.

Under a rule taking effect July 1, borrowers in this situation must start paying off their debt before they can qualify for a loan. They can either pay the amount in full or enroll in a payment plan and make three monthly payments.

This includes credit-card and medical debt. Different rules apply to debt from another mortgage. If you've had a foreclosure, you'll have to wait three years to qualify for an FHA-insured mortgage.

FHA loans are typically used by first-time homeowners and require a minimum 3.5% down payment, lower than Fannie Mae and Freddie Mac's current requirements.

Source:  The Wall Street Journal

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