Articles Published in: July 2011

July 29, 2011

FHA Loans For Homes Near Airports and Runways

The location of the home an FHA loan applicant wants to purchase affects many things connected to FHA loan approval. The FHA loan limit is a good example–these limits are set by county and vary depending on the housing market in a given area. Homes located in some counties may have requirements based on local building codes other areas don’t require. And some properties may get closer scrutiny if they are located in or near flood zones or other areas identified as prone to natural disasters. With all that in mind, some borrowers may worry about the eligibility of a particular home for an FHA loan based on its proximity to airports or military air fields. Is a property rendered ineligible for an FHA home loan because it is in | more...

July 28, 2011

FHA Loans, the Fair Housing Act, and Discrimination

By Joe Wallace

Elsewhere on this blog, we’ve mentioned the policies of the FHA, Department of Housing and Urban Development, and federal law designed to protect borrowers from discriminatory practices in real estate lending and related areas. FHA home loans are, by federal law and program requirements, intended to be available to all qualified applicants regardless of race, color, national origin, religion, sex, familial status or disability. But some people still don’t understand the full implications of these laws, which extend to rentals and homeowners associations, not just the lending process. A July 20, 2011 press release from HUD describes charges against a Wisconsin landlord accused of violating the Fair Housing Act by “allegedly establishing different terms for a single mother

July 27, 2011

FHA Roof Requirements

By Joe Wallace

One frequently asked questions about the FHA loan process is about roof requirements. When a buyer views a home and decides to make a commitment to buy using an FHA insured mortgage, the sale of the home cannot proceed until the property has been reviewed by an FHA approved fee appraiser. It’s the appraiser’s job to look over the home, make sure it meets FHA standards, and assign it a fair market value. FHA standards include making sure the property is safe, livable, and has no obvious structural issues or defects within the scope of the appraisal. (An appraisal is not a home inspection and borrowers should never accept an appraisal as a guarantee that the home is defect-free.) That includes the roof–FHA and HUD regulations say it must not | more...

July 27, 2011

FHA Condo Loans: Who Approves the Condos?

By Joe Wallace

FHA loan applicants looking for a condo loan have several options open to them when it comes to finding a project that is FHA-approved. The Department of Housing and Urban Development along with the FHA maintain a list of approved condo projects eligible for FHA loans, which is searchable by city, state, and other factors. You can find that list here: https://entp.hud.gov/idapp/html/condlook.cfm But is the existing list the only resource FHA borrowers have to find a condo project? What if the buyer finds a suitable condo that is not yet FHA approved? Thanks to the Housing and Economic Recovery Act (HERA) of 2008, changes have been made to the FHA condo project approval process, effective for all case numbers issued after December 7, 2009. According to the official site, “FHA | more...

July 26, 2011

Can FHA HECM Loans Become Delinquent?

By Joe Wallace

In troubled economic times, FHA borrowers can get into trouble on their mortgages because of reduced income, higher prices and other issues. FHA and conventional borrowers know that missing one payment isn’t necessarily the road to foreclosure, but such problems should be addressed quickly to avoid going into loan default and/or foreclosure proceedings. Those with Home Equity Conversion Mortgages wouldn’t seem to be affected in the same way, since a HECM loan is designed to give the borrower access to funds supplied using the equity in the property as the security for the loan. There are no monthly payments and the loan is satisfied once the borrower dies or sells the home–once the home is sold, the loan is paid off in full, So how is it possible that an | more...

July 25, 2011

FHA Loan Down Payments

By Joe Wallace

FHA insured loans feature down payments as low as 3.5%. Borrowers considering the purchase of a home with an FHA or conventional mortgage should anticipate this expense as they make a budget that includes the new home purchase. There are a variety of costs associated with a home loan including the down payment, closing costs, appraisal fees and other expenses. The down payment can be daunting for some borrowers–having enough time to save up for the expenses of a new home purchase is one reason most real estate experts and financial planners recommend borrowers spend at least a year preparing for a home loan. But even for those who take the time to plan and save, the down payment requirement may be more than they can afford. Is there any | more...

July 22, 2011

FHA Loans and Appraisals: Who Sets the Appraisal Fee?

By Joe Wallace

The appraisal process is one of the most important steps toward buying a home with an FHA-insured mortgage. Borrowers cannot be approved for an FHA loan without the FHA appraiser doing his or her work to establish fair market value of the property and make sure the home meets FHA requirements. Like almost everything else in the FHA insured loan process, there are rules and regulations that guide appraisers, the lender who hires them, and how the work is to be done. One area the FHA is quite clear about in the rules is the appraisal fee. FHA does not have a fee structure or table for appraisers–there are no fixed dollar amounts for appraisal services. But that does not mean the FHA doesn’t have rules covering how high these | more...

July 21, 2011

FHA Streamline Refinance Loans and Mortgage Term Reductions

By Joe Wallace

FHA loans are available with terms of 15 and 30 years. Borrowers can choose shorter loans with higher payments, or they can choose a longer loan term and lower payments depending on what their financial priorities are. The shorter-term loan with higher monthly payments can result in less money being paid in interest over the lifetime of the loan, but for many borrowers the higher monthly obligation isn’t as affordable. Choosing the right loan term for your financial goals and monthly budget can be tricky. Some choose the longer loan term to maintain their monthly budget, but as people progress in their careers it may be more affordable later to take on those higher payments. Some decide simply to pay more than the monthly amount due, but others may seek | more...

July 21, 2011

FHA Loans And Appraisal Expiration Dates

By Joe Wallace

When a buyer finds a home to purchase using an FHA insured mortgage, the property must be appraised to establish the market value and make sure the home meets FHA standards before the loan can be approved. Once the home has been appraised and approved for sale, the borrower and lender can work out an agreed closing date. But FHA appraisals have an expiration date–they don’t remain valid indefinitely due to housing market changes and other variables. One common question about the appraisal process is whether the FHA allows an appraisal to be extended if it expires prior to the closing date. The short answer is that the appraisal may be extended for thirty days to allow the loan to close, “If a sales contract is signed or the borrower | more...

July 20, 2011

FHA Requirements For Condo Units

By Joe Wallace

In our last blog post we discussed FHA rules on condo units that affect their eligibility for FHA mortgages. The FHA does not approve condo loans for any property that features deed restrictions which penalize the borrower for selling or transferring ownership of the condo to someone else. FHA regulations state that any property purchased with an FHA mortgage must be freely transferable without penalty. But those aren’t the only requirements on FHA condo loans. FHA rules include provisions for proper documentation (in conjunction with applicable state law) of homeowner’s agreements, and statements of understanding between condo owners about shared responsibility for property management. FHA borrowers new to condominium ownership might not know that the responsibilities of condo ownership include shared duties and costs such as facility maintenance, code compliance, | more...