n the past 18 months real estate prices have risen in California enough in many cases for borrowers to refinance out of FHA loans with high monthly mortgage insurance to conventional loans at 80% or less loan-to-value with NO mortgage insurance. If you have a FHA loan in California, don’t hesitate to contact me to and I can evaluate if this is worth while.
Refinancing from an FHA loan to a conventional could be a big money saver for you. There is no reason to continue to pay the monthly mortgage insurance on a FHA loan if you property value has increased to where you FHA loan balance is no 80% or less than your current home value.
FHA loans originated before April 2013 will not allow you to get rid of your mortgage insurance until at least five years has passed since you originated your FHA loan AND until the loan balance is paid down to 78% of the original purchase price. Even if five years has passed, you may be a long way from paying your loan balance down to 78% of the original purchase price. FHA does not go off the current value when eliminating FHA mortgage insurance, they go off the original purchase price. This is where a refinance to conventional loans comes into the picture.
Mortgage With No Credit Score in California
There are many people out there that want to get a mortgage to buy a home but for some reason they have no credit scores that report to the credit bureaus. The main reason for this is these borrowers do not have any lines of credit that report to the credit bureaus. They do not have any credit cards, student loans, car payments, etc… that would report payment history to the credit bureaus to give them a credit score. But the great news is these borrowers without credit lines or credit score can still get 3.5% down FHA home loans in California.
Here’s how it works. For a borrower to get a FHA home loan in California without credit scores, we would build what is called a “non-traditional” credit report for that borrower. We would just require a minimum of three credit references each for 12 months. This could be a utility bill, car insurance, cell phone bill, cable TV bill, rent, and other bills like this. We would just need documentation that you paid three bills like this on time for 12 months and we can get you approved for a FHA home loan up to $729,750 with minimum of 3.5% down. Some other factors to keep in mind about this loan:
- No major adverse public records filed the last 12 months
- No late payments on rent the last 12 months
- Maximum debt-to-income ratio 43% (add link)
- Two months of the housing payment in reserves required
- Full income verification required (two years tax returns, pay check stubs, w-2’s)