Articles Published in: 2011

August 16, 2011

FHA Mortgage Insurance Premiums: Are They Tax Deductible?

Successful home ownership requires borrowers to become more financially savvy in several ways; one of those ways is finding any possible way to save money as a home owner. FHA borrowers often invest in energy-efficient upgrades, modern insulation, even solar heaters. Refinancing an FHA home loan to lower the interest rate is another way to save, and for some homeowners tax legislation could help improve the bottom line even more. Some borrowers are now eligible to deduct some of their FHA mortgage insurance premiums on federal income tax returns. According to the FHA official site, FHA loan applicants who closed their transactions between 2007 and 2010 may be eligible based certain conditions spelled out in IRS rules. The FHA official site states, “Legislation was recently passed to make FHA mortgage | more...

August 15, 2011

FHA Streamline Refinance Rules for “Net Tangible Benefits”

By Joe Wallace

The FHA changed the rules on Streamline Refinancing Loans for all case numbers assigned on or after April 18, 2011. The new regulations now include a requirement that the lender must “determine that there is a Net Tangible Benefit (NTB) to the borrower as a result of the streamline refinance transaction”. Those tangible benefits include specific requirements based on the type of refinancing loan. For example, a fixed-rate loan that is refinanced to another fixed rate mortgage must have a five percent minimum reduction in the principal, interest and mortgage insurance payment, also described as PI & MIP. For FHA Streamline Loans which refinance fixed-rate mortgages to a One Year Adjustable Rate Mortgage, the requirements include a minimum two percent reduction in interest. Fixed rate FHA loans to Hybrid ARMs | more...

August 12, 2011

FHA Loans and Your Rights as a Borrower

By Joe Wallace

Predatory lending and real estate scams are common no matter what the economy is doing; when markets are unpredictable and the economic picture isn’t as optimistic as usual, scam artists tend to come out of the woodwork. How can house hunters protect themselves from scams and schemes? Sometimes the first step is knowing some of the basics. When it comes to applying for an FHA home loan, borrowers have rights which should be understood long before the search for a new home begins. Knowing your rights is a way to protect yourself from a range of things from simple high-pressure tactics that aren’t in your best interest, to outright fraud. The FHA official site emphatically states, “ATTENTION BORROWER! This may be the largest and most important loan you get during | more...

August 11, 2011

FHA Housing Counseling

By Joe Wallace

It’s easy to get overwhelmed by the details, facts and figures connected to buying a new home. If you’re new to the FHA home loan application process, there are plenty of unique requirements for FHA home loans not found in conventional mortgages–the protections offered to the buyer and lender alike require some additional learning as you go through the process for the first time. That’s why the FHA offers help to mortgage loan applicants in the form of HUD-sponsored housing counseling. There are a variety of agencies across the U.S. offering HUD-sponsored counseling services on buying a new home, credit issues related to applying for an FHA mortgage, even foreclosure avoidance and FHA reverse mortgage loan information. Some housing counseling services are free, while others come as low-cost packages. FHA | more...

August 10, 2011

FHA Loans and Credit Reports–Can The Borrower Contest Them?

By Joe Wallace

When applying for an FHA insured home loan, borrowers often wonder what kind of data lenders require to determine if the borrower is a good credit risk. FHA rules are fairly straightforward on the subject; according to the FHA official site, “Credit reports submitted with each loan must contain all credit available in the accessed repositories. They also must provide an account of all credit, residence history, and public records information available in the credit repositories of each borrower responsible for the mortgage debt.” The bottom line is that if you have information on your credit report, the lender has access to it and will consider it when deciding about approving the FHA loan. But can the borrower dispute or contest that information? There are two basic types of credit | more...

August 10, 2011

“Special” Property Requirements For FHA Loans

By Joe Wallace

Many of the most frequently asked questions about FHA home loans involve issues related to property requirements. Some borrowers are told by the lender or appraiser that a particular condition must be fixed before the loan can be approved. The borrower sometimes wishes to dispute such requirements, asking where in the FHA rules it specifically states that “condition X” must be addressed in order for the loan to proceed. But not every situation a borrower is likely to encounter is specifically addressed by a line in the FHA rulebook. What some don’t understand is that the FHA does not anticipate every housing issue with a rule addressing that condition. Instead, the FHA rules are designed to defer to local building codes, plus state or local laws where applicable. That’s not | more...

August 9, 2011

FHA Loans and Down Payment Assistance

By Joe Wallace

FHA home loans require a “minimum investment” or down payment from the borrower in order to be approved. The amount of the down payment for FHA insured loans at the time of this writing is a minimum 3.5% of the price of the home. Some loans may require more due to certain factors, but 3.5% is the FHA minimum. The buyer must pay the down payment, and it should be noted that other up-front costs such as closing expenses, appraisal fees and other charges do not count towards this minimum. The down payment amount all by itself is a serious amount of money for any borrower, and it’s one reason why financial experts always recommend borrowers take at least a year to prepare for the costs of a home loan–making | more...

August 8, 2011

Am I Ready For An FHA Home Loan?

By Joe Wallace

Buying a home with an FHA insured mortgage is an important investment, and many borrowers at the start of their journey not knowing whether they are ready for their entry into home ownership. We’ve said time and again that the best course of action is to take the advice of financial experts who recommend preparing at least a year before making a full commitment to buy a home. But why is that recommended? Some first time home buyers don’t understand the expenses connected to purchasing a home. The down payment required on FHA loans–3.5%– is the lowest you’re likely to find compared to conventional loans which often require 10% down or more. That down payment is only one of the expenses. There are closing costs, appraisal fees, and optional money-saving | more...

August 5, 2011

FHA Loans and Earnest Money Verification

By Joe Wallace

When a house hunter finds a home they want to make a serious offer on, they move out of one phase of the home buying process and into another. The shopping phase is what some view as the cost-free part of finding a home to buy with an FHA insured mortgage. Once the right property is found, that’s when the borrower starts to tap into the money he or she has set aside to deal with the costs of purchasing real estate. One of those expenses? Using earnest money–the amount an FHA borrower puts down to show a seller they are making a serious offer on the property. According to the FHA official site, earnest money “must be substantial enough to demonstrate good faith and is usually between 1-5% of | more...

August 4, 2011

FHA Loan Options for HUD Homes

By Joe Wallace

A HUD home is defined by the FHA as “a 1-to-4 unit residential property acquired by HUD as a result of a foreclosure action on an FHA-insured mortgage.” When a home owner with an FHA mortgage loses the property because of loan default and foreclosure proceedings, the Department of Housing and Urban Development takes ownership and puts the house back on the market. According to the official site, HUD homes are sold as-is and have no warranty. There are two basic types of HUD homes available. One is considered “insurable” which means they meet the FHA’s minimum property requirements and would theoretically be eligible to be purchased with an FHA home loan. The other type is classified as “uninsurable” which means the property does not live up to FHA MPRs. | more...