Q: I'm scared that my mortgage is headed to foreclosure. My employer has reduced my hours. I am struggling to make my payments, and can't refinance to current mortgage rates because my home has lost value. What should I do?
A: Contact your mortgage servicing company immediately. You may qualify for a mortgage loan modification under the Home Affordable Modification Program (HAMP). If you cannot connect wit your mortgage company, consult a HUD-approved housing counselor for help. Before calling or meeting with your lender or housing counselor, be prepared to document your source of hardship and to speak frankly about your financial situation. Have a pen and pencil handy when calling, so you can make note of instructions and responses to your questions.
Q: I'm a little short on cash, and want to use an FHA loan for purchasing my first home. I have received several mortgage quotes, and have heard different stories about how high my credit score must be. What's the deal?
A: Although FHA guarantees mortgage lenders against losses caused by foreclosure, it is not an actual lender. FHA establishes guidelines for its loan programs, but mortgage lenders may add their own requirements, as long as they meet minimum FHA guidelines. A typical example is requiring a higher minimum credit score. This practice of adding rules on top of rules is called "investor overlay." Dealing with FHA approved-mortgage lenders and carefully comparing mortgage quotes can help with avoiding extra costs and rules.