Fha consumer credit counseling program

However, some conforming lenders have published their own guidelines online. Freddie Mac lenders get similar guidance:. If a valid credit score is obtained and the credit history meets all the requirements of the individual loan program, no further credit evaluation is required. This is nearly identical to the FHA stance on Chapter 13 bankruptcies, which are actually court-ordered debt management plans.

If you want to consolidate debt and pay it off , you can do it outside of a debt management plan. This can help you keep your FICO score higher, and make mortgage approval more likely. For example, if you consolidate your credit card debt with a fixed personal loan, your utilization ratio and credit score usually improves. If you own property with some equity, a second mortgage or home equity line of credit HELOC can reduce your monthly payments and interest rate.

Even a Chapter 13 bankruptcy might be better than a standard DMP. First, all creditors are required to participate. Second, the Court determines a payment that you can afford. If you make all payments in the plan over a usually five-year period, you can emerge debt-free.

Any remaining balances are written off. Finally, interest on accounts does not continue to pile up during your repayment. Even if the immediate effects of filing are harsh, in the long run, bankruptcy might be the better solution.

You can be approved for an FHA home loan after 12 months of on-time payments in your bankruptcy plan, if you get approval from the Court or Trustee. Conforming mortgage rates depend a lot on your credit score.

Check with several mortgage lenders and ask about their pricing and guidelines when you buy a house while in credit counseling. How Soon Can I Refinance? Borrowers should always work on their credit, counseling program or not, before applying for any major line of credit such as a mortgage or auto loan. Some borrowers choose a formal credit counseling program in order to work on credit repair issues, and there is an understandable concern that participating in such a program might potentially affect a credit application.

The fear for some is that if a lender knows the borrower is in such a program that it might become a problem at loan approval time. There are two types of FHA loan processes. We explain all that so that the FHA loan rules for credit counseling programs makes sense to potential borrowers.

According to HUD The lender can process such applications using automatic underwriting, assuming the borrower is otherwise qualified. No explanation or other documentation is needed.