Articles Published in: December 2012

December 19, 2012

FHA Announces Disaster Assistance For District of Columbia Storm Victims

It seems hard to believe that Hurricane Sandy is STILL making headlines these days, but on December 17, the FHA announced the latest round of disaster relief for Sandy victims–this time in the District of Columbia. That relief includes foreclosure assistance, rehab loans and refinancing loans. According to the FHA/HUD press release HUDNo.12-190, “U.S. Housing and Urban Development Secretary Shaun Donovan today announced HUD will speed federal disaster assistance to the District of Columbia in addition to resources being provided by FEMA and other federal partners. HUD will provide support to homeowners and low-income renters forced from their homes due to Hurricane Sandy.” The week prior to that December 17 press release, President Obama made a federal disaster declaration for the District of Columbia, which allows the FHA and HUD | more...

December 18, 2012

How Long Does FHA Loan Approval Last?

By Joe Wallace

The FHA has specific procedures for everything from credit checks to the money needed to be paid at closing time. There are also rules for loan approval including how long that approval remains in effect. How long should a borrower expect to have approval for an FHA mortgage without taking action on that loan approval? Let’s look at what the FHA says about this process in HUD 4155.1, Chapter 1, Section A which includes information on what happens after loan approval. According to the FHA, when the application is approved, the lender; • records the results of the credit analysis on the HUD-92900-LT, FHA Loan Underwriting and Transmittal Summary • enters any modification of the mortgage amount or approval conditions under “Underwriter Comments” on the form, and • approves the | more...

December 17, 2012

FHA Loan Question: Minimum Property Requirements and “Old Wiring”

By Joe Wallace

A reader asks, “I’m looking to purchase a home though a loan from FHA. The home is old but only occupied by a single family, very nice condition in and out, but has old 100 amp wiring and has a old heating system. No problems with either. Will this affect the process of the purchase?” Questions like these are common, and before we answer it’s important to point out that the FHA itself does not lend money. It guarantees the home loan which is issued by a private lender. We only mention this because some reader questions are worded in such a way that it seems there may be a mistaken impression that FHA actually offers the loan money–it does not. With respect to this reader question, FHA loan rules | more...

December 14, 2012

FHA Home Loans: What The Lender Does With Your Application

By Joe Wallace

When it’s time to apply for an FHA home loan or get pre-approved for an FHA loan, there is paperwork that must be completed and submitted to the lender. This can be a bit time consuming and requires more detail than a typical credit card application or similar lines of credit. But what does the lender do with all that information? Why is the borrower required to submit so much detail for a home loan? It’s obvious that the size of the amount has a lot to do with that, but there are rules the lender must follow for these applications that adds to the paperwork reqiurements. According to the FHA official site, “The purpose of the mortgage credit analysis is to determine ? a borrower’s credit performance ? a | more...

December 13, 2012

FHA Loan Rules For Interest Rate Lock-Ins

By Joe Wallace

Many people are considering the purchase of a new home lately since, at the time of this writing, mortgage loan interest rates are at or near historically low amounts. Borrowers who might have wondered whether it was a good idea to commit to a home loan a year or two ago are taking another look due to these low rates. When a borrower decides to commit to an FHA home loan, they fill out an application and work with a lender to get approved for the mortgage. Assuming the loan application is approved and the loan will move forward, the borrower and lender may agree on an interest rate and commit to that rate–something known as an interest rate lock-in. Coming to a mutual agreement on that interest rate is | more...

December 12, 2012

FHA Loan Eligibility Rules–Who Is Automatically Disqualified?

By Joe Wallace

We get many questions about FHA loan rules for those who have had bankruptcies, foreclosures, loan defaults and other credit issues on their records. FHA loan rules are clear–having these issues in your credit history is not an automatic cause to reject a loan application, but the borrower must wait out a minimum “seasoning period” after foreclosure, bankruptcy, etc. But there are certain cases where a borrower IS automatically ineligible for an FHA loan. What are these situations? According to FHA loan rules as described in Chapter Four of HUD 4155.1 in the section titled “Basis for Rejecting a Borrower for Federally Related Credit” you’ll learn that an FHA loan applicant is “not eligible to participate in FHA-insured mortgage transactions if he/she is suspended, debarred, or otherwise excluded from participating | more...

December 12, 2012

Are Military Members Eligible For FHA Home Loans?

By Joe Wallace

Members of the Army, Navy, Air Force, and Marine Corps have a military benefit through the Department of Veterans Affairs that they can use to purchase a home with no downpayment in most cases, and several other perks. Some of those perks are very similar to FHA loans, such as the option to pre-pay or pay off the loan ahead of schedule without a penalty. But are military members who are eligible for VA loans also eligible for an FHA loan if they choose FHA over VA? Does having the option to apply for a VA home loan render them ineligible for an FHA mortgage instead? FHA loan rules do not exclude military members; there are many reasons why a borrowe may choose not to use his or her VA | more...

December 10, 2012

How FHA Loan Limits Work

By Joe Wallace

Recently the FHA announced the new maximum loan limits for 2013. These limits are normally revised annually, but sometimes changes in the law may cause the limits to be recalculated depending on the new regulations put into place. The FHA limits published for 2013 are in effect for the entire calendar year from 1 January 2013 to 31 December 2013 unless otherwise changed by law. According to the FHA official site, maximum loan limits are developed as follows: “The statutory provisions of the National Housing Act establish the maximum loan limits and mortgage amounts for all FHA mortgage insurance programs. Maximum loan limits vary depending upon the • specific program under which a loan is insured • number of dwelling units in the property (one to four units), and • | more...

December 10, 2012

FHA Announces FHA Loan Limits For 2013

By Joe Wallace

The FHA has released maximum loan information for 2013. According to Mortgagee Letter 12-26, “These limits apply to forward mortgages insured under the following sections of the National Housing Act (NHA): 203(b) (FHA’s basic 1-4 family mortgage, including condominiums), 203(h) (mortgages for disaster victims), and 203(k) (rehabilitation mortgage insurance).” The FHA says the new limits are applicable for January 1, 2013 through December 31, 2013. The FHA Floor and Ceiling loan limits “will remain the same as those that were in effect as announced in ML 11-39” last year. The FHA also announced in this mortgagee letter that the “maximum claim amount and loan limits for Home Equity Conversion Mortgages” will remain at $625,500. There are two areas borrowers should know about when it comes to FHA loan limits–the “floor” | more...

December 7, 2012

FHA Refinance Loan Options

By Joe Wallace

Recent news headlines related to “fiscal cliff” include warnings of possible tax hikes, a loss of (or cap on) mortgage loan interest rate tax breaks and other bad-news type possibilities. Those headlines make some homeowners seriously think about refinancing their FHA mortgages–getting into lower interest rates and/or lower payments to offset the higher costs of owning a home should the fiscal cliff issue enter a worst-case scenario. While no homeowner should rush into such a decision, those who are ready to commit should know their FHA refinance loan options. According to the FHA official site, borrowers with FHA or conventional home loans have the following choices as described in HUD 4155.1 Chapter Three: “FHA insures several different types of refinance transactions, including –Streamline refinances of existing FHA-insured mortgages made with | more...