Timely news, information and advice concentrating on FHA, VA and USDA residential mortgage lending.

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Articles Published in: August 2012

August 31, 2012

FHA Loan Reader Question: Am I Eligible For an FHA Loan?

By Joe Wallace

A reader asks, “Me and my husband lost our home due to a house fire. We are currently in a Chapter 13 bankruptcy and have been since January of this year. Is there any way we can buy a new home in this situation? We both have jobs also.” FHA loan rules specifically address the circumstances a borrower who has a Chapter 13 on his or her record can get an FHA home loan. According to HUD 4155.1 Chapter Four Section C; “A Chapter 13 bankruptcy does not disqualify a borrower from obtaining an FHA-insured mortgage, provided that the lender documents that

 

August 30, 2012

FHA Loan Reader Questions: How Long To Close The Home Loan?

By Joe Wallace

A reader asks, “Once an offer has been made on a home, how long should it take a lender who has prequalified but not preapproved a loan to close on the home?” There are many variables at work with an FHA home loan, so there is no set time period. Many lenders may use a stock answer of between 30 and 45 days, but you should not expect an FHA loan to close within a week to ten days of the mortgage application. It is very important to point out that pre-qualifying for an FHA loan is not the same as having the lender process the loan application data, verify income and employment, and pull your credit reports. That process definitely takes time, which is why the 30-45 day window | more...

 

August 29, 2012

FHA Loan Appraisals: Can I Get A Refund?

By Joe Wallace

When a buyer looking for a home to purchase with an FHA mortgage finds a home, before the loan can be approved there must be an FHA appraisal. This appraisal will determine the FHA loan amount which is based on the fair market value of the home, not the asking price set by the seller. In situations where the appraisal comes back with a fair market value lower than the asking price of the property, some buyers struggle with a decision to walk away from the loan. In some cases it’s best to walk away, in others it may be a good idea to re-negotiate the sale price. But some borrowers still walk away from the property, not liking the terms or the price. The first question many of these | more...

 

August 28, 2012

FHA Loan Reader Questions: FHA Loan Processing Times

By Joe Wallace

A reader asks, “Once an offer has been made on a home. How long should it take a lender who has pre-qualified but not pre-approved a loan to close on the home?” This type of FHA loan question is best answered by the lender; it’s impossible to predict what factors could affect a home loan once the process is set in motion. The financial institution’s work load, the amount of time it takes the appraisal report to be completed and sent back and other factors all depend greatly on the housing market. It’s also important to point out that pre-qualification is not a guarantee of FHA home loan approval; if a borrower did not fully disclose information on the application form that comes to light at another time, that could | more...

 

August 28, 2012

FHA Loans, Fair Housing Laws, and Discrimination: What You Can Do

By Joe Wallace

In the month of August, 2012, the FHA/HUD official site reported no fewer than four cases investigated by the Department of Housing and Urban Development related to housing discrimination. In one case, the owners of an Alabama mobile home park were charged with discriminating against an African-American family; another case that reached the settlement stage in Alabama involved discrimination against Hispanic residents. Two more cases, one in West Virginia and another in Minnesota, involved racial bias and discrimination due to a medical condition. FHA loan rules, state laws and federal statutes forbid discrimination of any kind in the housing process. Whether you are applying for a home loan, looking for rental housing, or trying to renew leases or refinance, it is illegal to deny housing for reasons of race, creed, | more...

 

August 27, 2012

FHA Loans and Social Security Income: Important Rule Changes

By Joe Wallace

The Federal Housing Administration has issued new guidance to lenders regarding the use of Social Security Income to qualify for FHA home loans. FHA/HUD Mortgagee Letter 12-15, “Documentation Requirements for Income from the Social Security Administration” lists the new rules for documenting and verifying SSI as income for the purposes of getting an FHA insured mortgage loan. The mortgagee letter states, “The following guidance replaces HUD Handbook 4155.1, 4.D.2.k, in its entirety.” “All income from the Social Security Administration (SSA) including, but not limited to, Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI), and Social Security Income, can be used to qualify the borrower if the income has been verified, and is likely to continue for at least a three year period from the date of mortgage application.” That’s | more...

 

August 24, 2012

FHA Loans For Disaster Victims: The 203(h) Program

By Joe Wallace

With all the natural disasters in the news lately, plus areas with federal natural disaster declarations in Wisconsin, Maryland, and Montana counties, it seemed like a good time to discuss the FHA 203(h) loan program for disaster victims. The FHA/HUD official site summarizes the FHA 203(h) program as follows; “The Section 203(h) program allows the Federal Housing Administration (FHA) to insure mortgages made by qualified lenders to victims of a major disaster who have lost their homes and are in the process of rebuilding or buying another home.” Not everyone can apply for this particular FHA home loan program. According to FHA.gov, “Individuals are eligible for this program if their homes are located in an area that was designated by the President as a disaster area and if their homes | more...

 

August 22, 2012

What Does My Lender Need To Process My FHA Loan Application?

By Joe Wallace

FHA loan rules specify a list of required documents and paperwork needed to process an FHA home loan properly. In addition to your application data, the lender needs a list of things in order to perform the “mortgage credit analysis”. Not all of these documents are supplied by the applicant, but some of the lender-generated paperwork requires the borrower’s permission in writing, such as the approval to pull credit reports from the three major credit reporting agencies Equifax, TransUnion, and Experian. The list of required documentation also includes “evidence of a Social Security number” which is usually your Social Security card or other documents the lender may accept as proof of your number. The lender must complete a verification of employment, which means following up on the data you provided | more...

 

August 21, 2012

What Are My Chances For An FHA Loan? Reader Questions

By Joe Wallace

A reader asks, “I have good credit but my wife had a delinquent student loan. It is now up to date for the past two months. We only have two car payments, never been late. We also have (a) home in another part of the state since my job transferred me to a different city. What are the chances of us getting a loan?” Questions like this are hard to answer for several reasons–one of which is the reader doesn’t provide any credit score information. FHA home loans require the borrower to have a minimum credit score. In general, borrowers should not expect an FHA loan unless their credit score is at least 580 or better, and many lenders won’t approve a loan for borrowers with credit scores lower than | more...