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FHA questions I can't find in the forum...


NJD123
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Hi there,

My wife and I live with our kids in a duplex owned by her father (we rent from him). He intends on selling it to us as soon as we are able to get a loan for it. We live in one unit and the other side is empty since it needs too much work to rent out. We have spent the cash to fix up our side ourselves including new electrical, plumbing etc. We would like to get the FHA mortgage wrapped up with the rehab loan (I think a 203?) but aren't in a position to do so just yet. PLUS we recently got permanent custody of my nephew (making 3 kids total), and my wife is disabled and needs a home office, so we're thinking this duplex is too small for us after all.

 

We DEFINALY need a bigger house but would like to own this place as well since we have already put money and sweat equity into it. This house would be sold right now for around 65,000 and we'd only need a total loan of around 90,000 to fix it up as a rental property

 

1) My federal student loans will be out of default next month. Will the default still be a bar to an FHA loan a year and a half from now or is it just while actively in default? How long out should we be before we apply?

 

2) Is it true you are considered a first time buyer for an FHA loan after 3 years? In other words would we be able to buy this place in 2 years, wait three, and then buy another house that we actually fit in while keeping this one as an income property? If not our other option is just to save up for an FHA loan for a bigger house right off the bat in like 3-4 years.

 

Thanks for any help!

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Hi there,

My wife and I live with our kids in a duplex owned by her father (we rent from him). He intends on selling it to us as soon as we are able to get a loan for it. We live in one unit and the other side is empty since it needs too much work to rent out. We have spent the cash to fix up our side ourselves including new electrical, plumbing etc. We would like to get the FHA mortgage wrapped up with the rehab loan (I think a 203?) but aren't in a position to do so just yet. PLUS we recently got permanent custody of my nephew (making 3 kids total), and my wife is disabled and needs a home office, so we're thinking this duplex is too small for us after all.

 

We DEFINALY need a bigger house but would like to own this place as well since we have already put money and sweat equity into it. This house would be sold right now for around 65,000 and we'd only need a total loan of around 90,000 to fix it up as a rental property

 

1) My federal student loans will be out of default next month. Will the default still be a bar to an FHA loan a year and a half from now or is it just while actively in default? How long out should we be before we apply?

 

2) Is it true you are considered a first time buyer for an FHA loan after 3 years? In other words would we be able to buy this place in 2 years, wait three, and then buy another house that we actually fit in while keeping this one as an income property? If not our other option is just to save up for an FHA loan for a bigger house right off the bat in like 3-4 years.

 

Thanks for any help!

 

 

1) FHA requires 12 months no lates on your CR

 

2) No. You can be considered a FTHB if you do not own ANY property for 3 years. FHA is NOT a FTHB program.

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I don't know very much about student loans, but once you are out of default, does the bad history get removed from your report? For some reason I seem to remember that when you successfully rehab student loans, the default does go away and it won't hinder you in the FHA process. I could be wrong, though, and hopefuly, someone else will chime in.

 

The previous poster gave you the right answer on the FTHB question. I just wanted to add that you can't have more than one FHA loan at a time anyway.

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I don't know very much about student loans, but once you are out of default, does the bad history get removed from your report? For some reason I seem to remember that when you successfully rehab student loans, the default does go away and it won't hinder you in the FHA process. I could be wrong, though, and hopefuly, someone else will chime in.

 

The previous poster gave you the right answer on the FTHB question. I just wanted to add that you can't have more than one FHA loan at a time anyway.

 

 

There's a student loan forum. You can ask there.

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The student loans will not "fall off" your reports just because they are taken out of default. They will come off after the seven year period from when they were placed on your reports unless something was done to re-age them. Rehab-ing them can get the baddies removed but that takes a year or so and must be set up in an agreed upon program. Rehab-ing them does not immediately take them out of default though. Paying the loans off or consolidating them is the only way to get them immediately out of default status.

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Hi there,

My wife and I live with our kids in a duplex owned by her father (we rent from him). He intends on selling it to us as soon as we are able to get a loan for it. We live in one unit and the other side is empty since it needs too much work to rent out. We have spent the cash to fix up our side ourselves including new electrical, plumbing etc. We would like to get the FHA mortgage wrapped up with the rehab loan (I think a 203?) It is called 203K. but aren't in a position to do so just yet. PLUS we recently got permanent custody of my nephew (making 3 kids total), and my wife is disabled and needs a home office, so we're thinking this duplex is too small for us after all.

 

We DEFINALY need a bigger house but would like to own this place as well since we have already put money and sweat equity into it. This house would be sold right now for around 65,000 and we'd only need a total loan of around 90,000 to fix it up as a rental property

 

1) My federal student loans will be out of default next month. Will the default still be a bar to an FHA loan a year and a half from now or is it just while actively in default? No, once the loans are shown as rehabilitated you are immediately eligible for government backed loans again. However, that is only one aspect. How long out should we be before we apply?

 

2) Is it true you are considered a first time buyer for an FHA loan after 3 years? In other words would we be able to buy this place in 2 years, wait three, and then buy another house that we actually fit in while keeping this one as an income property? No, you have to not have had any ownership within the past 3 years before purchasing. However, you don't need to be a first time homeowner to qualify for FHA. If not our other option is just to save up for an FHA loan for a bigger house right off the bat in like 3-4 years.

 

Thanks for any help!

 

 

fla-tan

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I don't know very much about student loans, but once you are out of default, does the bad history get removed from your report? It will depend on who the Federally Guaranteed Student Loans are with. Who are they with? For some reason I seem to remember that when you successfully rehab student loans, the default does go away and it won't hinder you in the FHA process. This is correct. I could be wrong, though, and hopefuly, someone else will chime in.

 

The previous poster gave you the right answer on the FTHB question. I just wanted to add that you can't have more than one FHA loan at a time anyway.

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The student loans will not "fall off" your reports just because they are taken out of default. This is not necessarily correct. Some guarantors will remove all negative information once the loan(s) come out of rehab and some will not. The DOE recommends that default information be removed but they can not require it. They will come off after the seven year period from when they were placed on your reports unless something was done to re-age them. Rehab-ing them can get the baddies removed but that takes a year or so and must be set up in an agreed upon program. Rehab-ing them does not immediately take them out of default though. Paying the loans off or consolidating them is the only way to get them immediately out of default status.

 

 

fla-tan

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I will be officailly out of SL default in about a month here :) Assuming that would not take us out of the running for an FHA loan in the spring, here's some other questions:

 

My wife has a couple of credit issues she is clearing up, but hovers a bit over a 600 Fico. It will likely be better in the next few months as things get corrected (recently looked at CR for the first time and found duplicates and incorrect info). She has no lates in the past year, and a couple old collections that will be paid in the next month. My situation is FAR worse in that I have defaulted student loans and no credit other than that (some old utility collections and such that have been paid but nothing current). I am fixing my situation slowly, but steadily.

 

1) Should we just have her buy the house?

 

2) Would she be able to?

 

3) If she held the loan for this house and I worked on my credit for the next few years would I be able to hold an FHA loan on a different house? Or is it still a no-go since we're married?

 

4) If we did just try to buy this house with FHA and decided NOT to keep it for income property, are we able to get a different FHA loan on a new house if we sell the old one?

 

5) Can you re-finance a home loan to NOT be an FHA loan once your finacial situation gets better? Would such a situation allow us to take out an FHA loan for a new primary residence property?

 

Really we just want to find some way to buy a place with enough room. We'd like to keep this one for rental income if possible but that means we'd have to buy it first and then upgrade to a new place a few years later. We're hoping the next house will be in the range of 175K or more which would be doable much sooner if we were eligible for FHA. Any ideas? Or should we just let the rental property idea go?

Edited by NJD123
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The student loans will not "fall off" your reports just because they are taken out of default. This is not necessarily correct. Some guarantors will remove all negative information once the loan(s) come out of rehab and some will not. The DOE recommends that default information be removed but they can not require it. They will come off after the seven year period from when they were placed on your reports unless something was done to re-age them. Rehab-ing them can get the baddies removed but that takes a year or so and must be set up in an agreed upon program. Rehab-ing them does not immediately take them out of default though. Paying the loans off or consolidating them is the only way to get them immediately out of default status.

 

 

fla-tan

 

I beg to differ. My first comment is very true. "The student loans will not "fall off" your reports just because they are taken out of default." That is very true. They must be rehabbed to have the baddie removed. That is a fact. I mention rehabbing them further down in the post. Keep reading. Without rehabbing I would need to see proof that there has been a loan that was removed from a report just by being taken out of default. Please point me to any thread (or anywhere else) where simply taking them out of default removes them.

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