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Articles Published in: March 2012

March 20, 2012

Policy Changes For FHA Short Refinancing Loans: Debt-To-Income Ratio

By Joe Wallace

Recently we’ve been reporting on the latest policy changes to the FHA Short Refinancing Loan program. There’s one last change to cover–the new rules for debt to income ratios. For the FHA Short Refinancing Program, the maximum debt to income ratios have changed in some situations. The FHA mortgagee letter outlining changes FHA Short Refinance loans states: “Mortgagee Letter 2010-23, provides specific guidance for debt-to-income ratios for loans that

 

March 16, 2012

FHA Short Refinancing Loans For Underwater Borrowers With Conventional Mortgages

By Joe Wallace

Being “underwater” on a home loan means owing more on the property than the home is worth. In the last few years, this is a problem faced by more home owners across the nation due to the housing market crisis. In response to this, the Federal Housing Administration took action. In 2010, the FHA published a mortgagee letter outlining details of a plan called “FHA Refinance of Borrowers in Negative Equity Positions

 

March 15, 2012

FHA Loan Reader Question: Collection Actions and Payment Agreements

By Joe Wallace

A reader asks; “I have a student loan that was passed over to a collection agency. I came to a payment agreement with my case manager to pay $50 monthly payments. The original payment amount before collections was $200 a month. I have made consistent payments for 2 years now.” “I am set to close on a house in a few weeks. My mortgage lender is requiring a letter from my collection agency verifying our payment arrangement before I can close. I have called and talked to my case manager at the agency three different times and he is refusing to send any kind of validation letter to acknowledge the payment agreement. The payments have been set up on automatic draft out of my checking account which the agency set | more...

 

March 14, 2012

FHA Annual Mortgage Insurance Premium Changes

By Joe Wallace

When the FHA and HUD recently announced a reduction in mortgage insurance premiums for streamline refinancing loans, there was also a reminder of a pending increase to other mortgage insurance premiums. In late 2011, an act was signed into law which results in an increase in annual FHA mortgage insurance premiums for non-streamline FHA loans. According to FHA Mortgagee Letter 12-4, “On December 23, 2011, the President signed into law the Temporary Payroll Tax Cut Continuation Act of 2011 (Public Law 112-78), which requires FHA to increase the Annual MIP it collects by 10 basis points”. This change is for FHA loans with case numbers assigned on or after April 9, 2012. Borrowers who get FHA loan case numbers before this date would pay the mortgage insurance premiums current for | more...

 

March 14, 2012

FHA Mortgage Insurance Changes For Loans Above $625,500

By Joe Wallace

Recently we wrote about an FHA/HUD policy changed announced by President Obama that would lower FHA costs for borrowers applying for FHA streamline refinancing loans. An FHA/HUD press release (HUD 12-045) states, “Acting Federal Housing (FHA) Commissioner Carol Galante announced significant price cuts to FHA

 
FHA Home Loan Basics

March 13, 2012

FHA Offers Advice on Foreclosure Relief Scams

By Joe Wallace

A recent FHA/HUD effort in Atlanta to raise awareness about foreclosure scams offers good advice for borrowers anywhere in the United States. The FHA/HUD campaign “Know It. Avoid It. Report It.” recently ran in Atlanta during National Consumer Protection Week, March 4

 

March 12, 2012

FHA Loan Down Payments–How Much Is Required?

By Joe Wallace

One of the major differences in FHA loans compared to their conventional loan counterparts is the amount of down payment required. FHA loan borrowers are required to pay a minimum of 3.5%. Compare that to conventional mortgages, which have down payments that vary depending on the lender. You may be told by one bank that five percent is required, while another may ask for 10%. Your credit rating and other factors can affect how much money down is required for a conventional mortgage. While this is also true of FHA insured home loans, the minimum required down payment is often substantially less. For FHA loans, in some situations the down payment could be as low as $100–this is true in cases where the borrower is buying a HUD-owned home, one | more...

 

March 9, 2012

FHA Appraisals Versus Home Inspections

By Joe Wallace

An FHA-assigned appraisal is a required part of the FHA home loan process. This appraisal insures the property being purchased with an FHA mortgage loan meets FHA standards and assigns a fair market value to the property. But the appraisal does not make any guarantees that the home is defect-free. The borrower must pay for a home inspection to get a better idea of the true condition of the property, any hidden or possible defects, etc. FHA loan applicants should definitely plan to pay for both an appraisal and a home inspection–the FHA appraisal is the mandatory expense, but the inspection is technically optional. But it’s an option that should never be passed up. Even though a property has been approved for an FHA guaranteed loan does not mean it | more...

 

March 8, 2012

FHA Home Loan Down Payment Rules–Payment Sources

By Joe Wallace

FHA new purchase home loan programs, where the borrower is buying a new or pre-owned home, require the borrower to make a minimum down payment of 3.5% of either the appraised value of the property or the asking price of the home, whichever is lower. FHA loan down payments are strictly regulated, and not just with the percentage required to put down as the minimum cash investment. Did you know the FHA also requires documentation on the source of the down payment money depending on circumstances? FHA rules state documentation is required when the borrower pays more than 2% of the sale price. It