Articles Published in: November 2011

November 17, 2011

Reader Question: Title I Loans

FHA borrowers who want to repair or improve their homes have a variety of options to consider including FHA refinancing options for many different situations. But not all borrowers qualify for those options. One reader writes, “I am current on my mortgage but found out I am not eligible for a Home Equity Loan because of the continuing decline in home values in my area.” “I have one home improvement project that I really want to undertake which will add value to my home. Is the Title I Home Improvement loan something I could qualify for through an approved lender or are their income limit requirements? Is interest on this type of loan tax deductible?” We’ll tackle the last question first simply by saying that borrowers should consult a tax | more...

November 16, 2011

FHA Financial Report: 440,000 Families Helped Through FHA Refinancing Loans

By Joe Wallace

In a troubled economy, it’s easy to see why an FHA refinancing loan would be widely used–who doesn’t want to lower their monthly mortgage payments? Even in the best of times, a lower monthly commitment is attractive; when money is tight refinancing is on the minds of homeowners across the U.S. On Tuesday, November 15, 2011, the FHA and HUD released a financial report to Congress which included some figures that might surprise you. In 2011, the FHA “Served more than 1.2 million households and insured $218 billion in single-family mortgages, bringing the active single family portfolio to more than $1 trillion” according to an FHA press release. The press release, HUD No. 11-270, also noted that the FHA “…enabled more than 585,000 families to become homeowners for the first | more...

November 15, 2011

FHA Cash-Out Refinancing Maximum Loan Amounts

By Joe Wallace

A recent reader question came in asking about FHA loan maximum amounts for cash-out refinancing loans–we thought it might be a good time to examine the rules for those maximums. In general, FHA loans have a specific loan-to-value limit. According to FHA.gov, “Effective for case number assignments on or after April 1, 2009, the loan-to-value (LTV) of any cash-out refinance to be insured by FHA may not exceed 85% of the appraiser

November 14, 2011

FHA Streamline Refinancing Loans and Credit Qualifying Requirements

By Joe Wallace

Home loan refinancing is among of the most popular types of loans in a troubled economy. When the six o’clock news has regular gloomy updates, it’s not surprising that people turn to refinancing loans to lower their payments and improve the bottom line. FHA Streamline Refinancing Loans can help do just that–this type of refinancing is appealing because in many cases no additional credit check is required by the FHA (though the lender may require one anyway). In some cases, the lender does not have the option to process the FHA refinancing loan with no credit check–certain situations can “trigger” the credit check requirement. Those include any change in the mortgage term that results “in an increase in the mortgage payment of more than 20%” according to the FHA rules, | more...

November 11, 2011

FHA Loans and Fair Housing Rules: Settlement Reached in Maternity Discrimination Case

By Joe Wallace

FHA loans, like VA and conventional home loan programs, are subject to the Fair Housing Act, RESPA and other federal laws which work together to prevent discrimination in the housing market. One of the rules established by these laws concerns discrimination against home loan applicants based on their family status. That includes discrimination against FHA loan applicants based on pregnancy, single parenthood, the number of children in a given family, and other factors. Such discrimination is prohibited by federal law. The Department of Housing and Urban Development issued a press release on November 3, 2011, stating that it “has reached an agreement with Luxury Mortgage Corporation (LMC), a mortgage lender based in Stamford, Connecticut, settling accusations that the lender discriminated against a woman by denying her mortgage loan because she | more...

November 10, 2011

Situations That Can Affect Your FHA Refinancing Loan Application

By Joe Wallace

FHA refinancing loans have maximum loan amounts in the same way new purchase FHA mortgage loans do. Maximum refinancing loan amounts can be complicated depending on the type of loan and the situation the borrower is in when they want to refinance the property. A borrower’s individual circumstances can also affect basic eligibility for some types of refinancing loans, which is why it’s a very good idea to begin planning early for a refinance loan application. For example, it’s one thing for a home owner to apply for FHA Streamline Refinancing for the home they own and occupy–the rules are fairly straightforward. But what happens when someone who purchased an investment property needs to occupy that property as their primary residence and refinance the loan? According to FHA loan rules, | more...

November 9, 2011

FHA Streamline Loan Basics

By Joe Wallace

FHA insured loans have been eligible for Streamline Refinancing since the early 80s. According to the FHA official site, there are some common misconceptions about Streamline Loans that FHA borrowers and home owners should know before applying for these refinancing loans. For example, “Streamline” refers to the reduced amount of paperwork, qualifying requirements and other details involved in these mortgages. It does not mean there are no costs to the borrower or that no money will be paid out of pocket for an FHA Streamline mortgage. Borrowers do have the option of including costs of the loan into the mortgage, but that can seriously change the way the loan is handled if including those costs increases the loan amount too much. What are the basic requirements for an FHA insured | more...

November 8, 2011

Credit Report Requirements for FHA Home Loans

By Joe Wallace

To be processed by a lender, FHA home loan applications require detailed credit information from the three major credit reporting agencies. The lender uses these reports to determine that an FHA loan applicant meets the minimum credit requirements for a FHA home loan. Those requirements include the FHA minimum credit score and any additional credit score requirements set by the lender. The FHA minimum credit score must be above 500, but lenders frequently require scores at 620 or better. In order to get this credit score information, the lender can’t simply check–there is a specific set of procedures required for a credit check to “count” as an official representation of an FHA loan applicant’s credit worthiness. For example, the FHA rules say the credit data must come directly from the | more...

November 7, 2011

Reader Questions on FHA Loans: Interest Rates

By Joe Wallace

We love fielding reader questions–there’s nothing better than knowing that our posts are directly addressing the issues and answers FHA borrowers seek. One recent set of questions from readers last week includes a variety of queries about FHA loan interest rates. “On either the 203K or the Title I type loans, what is the average interest rate that is usually given? I am sure they vary from lender and from state, but any type of ballpark amount is appreciated.” The reader is correct that interest rates on FHA home loans vary from lender to lender–depending on the market in a given area and other variables, if you want to buy a home with an FHA mortgage it’s important to shop around for the best rates and terms. It’s important to | more...

November 4, 2011

FHA Credit Qualifying Streamline Refinancing

By Joe Wallace

FHA loans feature a refinancing option known as Streamline Refinancing, which features no credit check, no cash back to the borrower, and reduced paperwork due to the borrower’s status as an FHA borrower in good standing. An FHA Streamline Refinancing loan has several requirements including a rule which states the new loan must result in lower payments, lower interest rates, or both. But there’s also a credit qualifying FHA streamline loan option. According to the FHA rulebook, “Credit qualifying streamline refinances contain all the normal features of a streamline refinance, but provide a level of assurance for continued performance on the mortgage.” For these types of refinancing loans, “The lender must provide evidence that the remaining borrowers have an acceptable credit history and ability to make payments.” In what circumstances | more...