May 4, 2011
In our previous blog post, we discussed the rules for FHA cash-out refinancing loans. The FHA allows cash-out refinancing for qualified borrowers. Those qualifications include a requirement for the existing mortgage to be current. FHA
May 4, 2011
House hunters who purchase a home with an FHA mortgage loan may eventually decide to refinance the home to get a better interest rate, lower payments or to take advantage of the equity built up in the home. Many borrowers are curious about FHA cash-out refinancing options–does the FHA allow a cash-out refinancing option? The answer is yes, but there are some conditions that apply. There are requirements on cash-out refinancing that may not apply to other types of refinancing loans. For example, a cash-out refinancing loan will be denied to borrowers who are delinquent on the mortgage or who have a record of delinquency within the last 12 months. Borrowers with less than six months of payment history on the current mortgage will be turned down for cash-out refinancing, | more...
May 3, 2011
FHA loan applicants have many things to budget and plan for. Mortgage insurance is one of the costs associated with a home loan, and FHA loan applicants are required to pay an annual mortgage insurance premium. The reason for mortgage insurance is to protect the lender against a loss associated with a default/foreclosure on the home. An FHA borrower making a down payment of less than 20% is required to carry mortgage insurance. But borrowers should know that mortgage insurance isn’t required for the entire term of the loan. The insurance is automatically terminated based on the nature of the loan, the length of the loan term and the Loan to Value ratio or LTV. According to the FHA official site, for all FHA mortgages closed after January 1, 2001, | more...
May 3, 2011
FHA loan applicants who find a suitable home and want to buy it must wait out the required FHA appraisal process before a loan can be approved. The FHA appraiser’s job is to make sure the home meets minimum property requirements and to assign the fair market value. The fair market value establishes a baseline for the FHA loan amount and is a very important part of the process. That appraisal has an expiration date. According to FHA rules, ” Effective for all case numbers assigned on or after January 1, 2010 the validity period for all appraisals on existing, proposed, and under construction properties, including HUD REO appraisals that have an effective date of on or after April 1, 2010, will be 120 days.” That doesn’t give the borrower | more...
May 2, 2011
First-time home buyers looking into an FHA mortgage soon learn about a variety of requirements. Some are the rules set by a particular lender, others are dictated by the Department of Housing and Urban Development, while others are established by state laws that govern retail banking procedures. Of these guidelines, often the state laws vary the most from place to place. One example of this is the
April 29, 2011
In our last blog post we discussed how the lender processes applications and the information on them when approving FHA home loans. The FHA has a strict set of rules covering what must be used to underwrite the loan and how the borrower’s personal data must be verified in order to process the loan paperwork. Three areas are explored at length by the lender;
April 29, 2011
There are many types of FHA insured loans available for single-family residences. Borrowers can apply for a traditional home loan with a down payment, fixed interest rate and a 15 or 30-year mortgage. But there are plenty of other loans which can be applied for including; Section 203h Insured Mortgage for Disaster Victims Section 255 Home Equity Conversion Mortgage (HECM) Section 203k Rehabilitation Mortgage Energy-Efficient Mortgage Program (EEM) Adjustable rate mortgages Section 248 Indian Reservations and Other Restricted Lands Title I Home Improvements Regardless of what loan product is preferred, for new purchases and many FHA refinancing options, borrowers must fill out an application giving information that includes employment and residence history, detailed accounts of outstanding debts and monthly financial obligations and much more. The FHA requires this information in | more...
April 28, 2011
The FHA Reverse Mortgage program, also known as a Home Equity Conversion Mortgage, is a type of loan product available to borrowers age 62 and older and with sufficient equity built up in the property. The reverse mortgage program offered by the FHA has terms that include no monthly payments. The HECM is paid off when the owner dies or sells the property. The borrower gets the proceeds from the HECM loan dispensed according to the loan agreement, which can include a line of credit, installment payments or a combination of the two. Because of the unique nature of an FHA HECM loan compared to other mortgage loans, the FHA requires the applicant to get loan counseling before the loan may be approved. The FHA wants borrowers to be fully | more...
April 28, 2011
The FHA Home Equity Conversion Mortgage or HECM loan, also known as a reverse mortgage, has terms and conditions that must be clearly understood in order to get the most out of the loan. HECM loans have strict rules that must be followed in order to avoid violating the terms and conditions, which is why the FHA requires HECM loan borrowers to get counseling on reverse mortgages before they can be approved for an FHA HECM loan. The reason understanding these terms and conditions are so important has much to do with the nature of the loan itself–no payments are due from the borrower at any time unless he or she dies or sells the home. But if the borrower violates the terms of the loan, the lender is able | more...
April 27, 2011
“How can the FHA help me buy a home?” That’s one of the most frequently asked questions about the FHA home loan program. There is plenty of information about FHA home loans, but if you’re a first-time home buyer and don’t know where to look, having that question answered may be the most important part of the decision making process when trying to choose between a conventional loan and an FHA home loan. FHA loans are different than conventional mortgages in several basic ways. To start, FHA-insured loans are more attractive to lenders because the U.S. government backs the loan. That means lower risk for the lender. Because the government insures the loan in case of default or foreclosure, applicants with past credit trouble may have an easier time getting | more...