Articles Published in: October 2011

October 31, 2011

FHA Rehab Loans

The FHA 203(k) Rehab loan allows buyers and current home owners to “finance both the purchase (or refinancing) of a house and the cost of its rehabilitation through a single mortgage or to finance the rehabilitation of their existing home.” The 203(k) can help raise the value of a property or simply make the home more comfortable for those who aren’t interested in selling. Many people think of the 203(k) only when considering large projects, but did you know there’s a smaller version of the 203(k) allowed by the FHA? According to the HUD official site, “For less extensive repairs/improvements” borrowers are encouraged to apply for a Streamlined 203(k). According to the rules of an FHA 203(K), the property must be at least one year old–the 203(k) isn’t meant for | more...

October 28, 2011

Factors That Affect Your FHA Loan Amount

By Joe Wallace

FHA loan applicants naturally want to know how much mortgage they are qualified to get–how much can an FHA borrower receive on an FHA insured home loan? The answer isn’t as simple as a fixed dollar amount. There are many things that factor in to the final FHA home loan amount and not all of them are connected to the sale price of the home. Your FHA loan amount is influenced by the current state of the housing market, the interest rate on the loan, the asking price on the property and the fair market value of the home. The first and most obvious factor that can affect an FHA home loan amount is the borrower’s qualifications. How much are you qualified to borrow based on your income and debt | more...

October 27, 2011

FHA Loans and Rental Income

By Joe Wallace

There are many frequently asked questions about FHA loans in connection with rental properties. Some borrowers purchase a home with an FHA insured mortgage and live there for a while, then decide to explore their options for renting the existing home out and purchasing a new one to live in. One of the most common questions in this case has to do with qualifying income for a new FHA loan. “Can I rent my current home and use the income to qualify for a new FHA mortgage?” According to the FHA official site, there was concern that borrowers might exaggerate the amount of rental income received on the first property. To address those concerns, the FHA instituted a new policy which took effect in late 2008. “Beginning with case number | more...

October 26, 2011

When an FHA Loan Application is Denied

By Joe Wallace

Transparency in the lending process and informed borrowing are two of the most important issues related to the “front end” of FHA loans. Before you commit to buy, even before you turn in an FHA home loan application, it’s crucial to know what your rights as a borrower are and how those rights affect every step of the FHA loan process. Did you know you’re entitled to an explanation as to why an FHA loan application was denied? According to the FHA official site, the Equal Credit Opportunity Act (ECOA) governs lender responsibilities in this area. “If your application is denied, ECOA requires your lender or mortgage broker to give you a statement of the specific reasons why it denied your application or tell you how you can obtain such | more...

October 26, 2011

How Long Does It Take To Process an FHA Loan Application?

By Joe Wallace

A frequently asked question about FHA home loans concerns the length of time it takes to learn whether the loan application has been approved or not. This is a part of the FHA loan process that can be stressful for some borrowers, especially those who have never applied before and don’t know what to expect. The simple answer is that FHA requirements include a rule that the lender must take action on your application and let you know about that action no later than 30 days after the application has been completed and turned in. FHA rules emphasize the application must be complete for this rule to take effect. But what does that mean? Some borrowers mistakenly think submitting partial information on credit data, employment history or other information might | more...

October 25, 2011

FHA Loans and Non-Purchasing Spouses

By Joe Wallace

One FHA loan frequently asked question relates to married FHA borrowers with non-purchasing or non-occupying spouses. When an FHA borrower applies for a loan and the spouse does not co-sign or co-borrower, are there situations where the spouse could be required to sign the loan? According to FHA loan rules, this issue depends greatly on state law. The FHA itself has no requirement for a non-borrowing spouse to sign, but states which require certain types of documentation for “valid and enforceable” loans could need a signature from the non-borrowing spouse. But what kind of signature? In these cases, the state law usually requires a signature to indicate the non-borrowing spouse’s status in connection with the loan. The non-borrower isn’t obligated by law to become financially responsible–just to state they are | more...

October 24, 2011

FHA Streamline Refinancing Rules: Adding and Removing Borrowers

By Joe Wallace

When an FHA borrower wants to refinance an FHA mortgage using FHA streamline refinancing, there are sometimes questions about adding or removing a borrower from the title. This may be needed for several reasons. If a borrower is getting a divorce, for example, refinancing the property under a single name would make sense. The same goes for a single borrower who is refinancing in connection with getting married–he or she might want to add the spouse to the title. When does the FHA allow the borrower to add or remove another person to the title during an FHA streamline loan? According to the FHA official site, adding a borrower is simple. “Individuals may be added to the title on a streamline refinance without a credit worthiness review, and triggering the | more...

October 21, 2011

Getting Ready For An FHA Home Loan

By Joe Wallace

Buying a home is a big decision. There are many factors to consider when trying to prepare for the commitment of home ownership, and an FHA loan applicant can learn a great deal by examining an FHA loan application and using an FHA mortgage calculator to learn what kind of financial details come into play. FHA loan pre-qualifying questions at sites like FHA.com (a private company, not a government website) ask some very important starter questions you can use to begin your research. For example, do you know how much you’re willing to spend on the home? Many borrowers at the beginning of the research process have a hard time judging what prices are fair for homes in their area and which ones might need some negotiation. Anyone who feels | more...

October 20, 2011

Does the FHA Provide Down Payment Assistance?

By Joe Wallace

Recently we posted about FHA rules for down payments. For all FHA new purchase home loans, there is a minimum down payment of 3.5%. Borrowers are required to make this down payment above and beyond any closing costs and related fees that may be required to be paid up front. Some borrowers may have a difficult time coming up with cash to make down payments, and while the FHA does allow loan applicants to borrow money for a down payment, it must come from a third party with no financial interest in the FHA insured loan transaction and must be secured by “real property” rather than a credit card cash advance or signature loan. Some borrowers ask if the FHA also offers a down payment assistance program to help borrowers | more...

October 20, 2011

Can I Add A Borrower To My FHA Home Loan?

By Joe Wallace

One common question about FHA home loans involves adding borrowers to the loan. Some house hunters begin their search for a home by themselves, but along the way decide they wish to co-borrow with someone else. The reasons vary–some borrowers get engaged to be married, others decide they’d rather share the expense of buying and owning a home with someone else, others want to purchase property with a family member. Whatever the reasons, adding someone to an FHA loan depends greatly on where a borrower is in the application process. FHA loan rules state that all borrowers must submit loan application data. No one can be added to an FHA loan without submitting their credit and employment details and other required information the same as the primary borrower. Lenders must | more...