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Jeremy Redlinger

Minnesota FHA Mortgage

Monday, January 30, 2012 - Article by: Jeremy Redlinger - Movement Mortgage - Message

In Minnesota FHA mortgages have been the popular mortgage product for the last few years as FHA mortgages currently offer new home buyers the ability to purchase a home with as little as 3.5 percent down and an FHA mortgage in Minnesota usually has a lower mortgage interest rate than conventional mortgage loans. A Minnesota FHA Mortgage also allows home owners who are not currently underwater to refinance their mortgage at a very attractable mortgage rate up to 97.5 percent loan to value on a rate and term refinance and 85 percent loan to value on a cash out refinance. In this article I am going to explain the basic qualifications borrowers need to meet in order to qualify for a Minnesota FHA mortgage.

The first basic step to qualifying for an FHA mortgage in Minnesota is to make sure that your current credit scores are up to par, 620 is the current middle score needed to qualify. As your credit score increased above 620, the less "hits" you take to the pricing of interest rates resulting in a lower or better paying mortgage rate, depending on how your loan is structured. If you were to pull your credit today and your credit score came back at a 620 that does not mean that you should just jump in and refinance or purchase a home, instead analyze your credit report with your loan officer and determine if there is anything you can do over the next 30 days to increase your credit score enough to help you achieve a lower interest rate.

The second basic step to qualifying for an FHA mortgage in Minnesota is to determine how much of a new mortgage your income qualifies you for. The current debt to income ratios for an FHA mortgage is 35 percent on the front end and 45 percent on the back end for max LTV (97.5%) mortgages and improve the lower the LTV. The front end of the debt to income ratio included your new mortgage's principle, interest, taxes, insurance, Private Mortgage Insurance (if applicable) and any home owners association fees (if applicable). Currently Private Mortgage Insurance is required on all FHA mortgages that carry a balance of over 80 percent loan to value. The back end debt ratio includes your front end debt and all recurring monthly revolving and installment debts that have appeared on your credit report such as credit cards and car payments.

It is also important to note that if you are behind on your current mortgage your loan to value limits may be reduced or you may not qualify for a new mortgage when refinancing. Additionally, if you have declared bankruptcy within the past 2 years or have had a foreclosure within the past 3 years, you will not qualify for an FHA mortgage in Minnesota.

Finally, all FHA mortgages in Minnesota require full documentation to prove a borrowers income for a loan approval. For a W2d employee you would need to provide evidence of your previous 2 year to date paystubs and your previous 2 year of W2 statements. For a self employed individual, you would need to provide evidence of the previous 2 years of personal tax returns and a current profit and loss statement if it has been over 6 months since your most recent filing. Additional documents may be needed depending on your personal situation.

Keep in mind that the requirements above are just the basics to qualifying for a Minnesota FHA mortgage and do not mean that if you do meet those requirements you are guaranteed an FHA mortgage approval. For a complete analysis of credit and income qualifications contact an approved Minnesota FHA mortgage lender. PRC Funding of Minnesota is a licensed mortgage broker and approved to originate FHA mortgages in the state of Minnesota.

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