November 15, 2011
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
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, 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
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 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
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
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 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...
November 3, 2011
There have been several reader questions lately about the foreclosure process on FHA home loans. What options do FHA borrowers have when facing the risk of default and/or foreclosure on their FHA mortgages? A quick look at the FHA official site’s page on the subject of foreclosure avoidance at http://portal.hud.gov/hudportal/HUD?src=/topics/avoiding_foreclosure reveals several options. One program known as HAMP is the Home Affordable Modification Program, which “lowers your monthly mortgage payment to 31 percent of your verified monthly gross (pre-tax) income to make your payments more affordable.” According to the FHA, a typical FHA loan modification under HAMP “results in a 40 percent drop in a monthly mortgage payment. Eighteen percent of HAMP homeowners reduce their payments by $1,000 or more.” Another program borrowers may consider is the Principal Reduction Alternative, | more...
November 3, 2011
Foreclosure is the worst-case scenario for home owners, but many don’t understand how the process works or at what point the FHA borrower may be in danger of losing his or her home. If you don’t understand how the foreclosure process works, but fear you may be nearing default or worse on your FHA mortgage, it’s definitely time to get educated about foreclosure and get in touch with your lender. FHA guidelines encourage borrowers to work closely with both the lender and the FHA to avoid loan default. What is the FHA timeline when it comes to missed payments and foreclosure proceedings? Many don’t understand how this works. Borrowers who miss a single payment face a serious issue, but there is still time to work out the problem and avoid | more...