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

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Articles Published in: 2012

January 20, 2012

FHA Loan Reader Question: Why Was I Denied an FHA Home Loan?

By Joe Wallace

Many readers write in with questions similar to the one we received this week, which includes the following: “I am recently divorced. While married, went through two bankruptcies (both discharged) have/had issues with back taxes (installment plans made and determined to be paid in full by ex per divorce decree). Have moved to another state, working (1.5 years), full time student. Was living with children, have moved into an apartment paying $600.00 per month (comfortably), because I could not get qualified for a loan. Have two major credit cards (visa/master credit cards not debts) established in my name for 1.9 years, never late, never over limit. Credit score is 620. Is there a main reason why, I did not or cannot be approved for a FHA loan?” Before addressing an | more...

 

January 19, 2012

FHA Loan Reader Question: FHA Loans and Credit History

By Joe Wallace

Sometimes, shopping around for a participating FHA lender is a bit more complex that you might think. There are basic issues related to competitive interest rates, getting the most favorable terms, even the simple chemistry between the borrower and the bank can be an issue. But what about situations where the borrower feels the lender hasn’t quite done right in terms of customer service? One reader left this comment; “I owned my home for 12 years (FHA loan) and sold it December 2010. I am now told that I have NO CREDIT SCORE!!! I paid cash for car and have no credit cards. I

 

January 18, 2012

FHA Loan Reader Question: FHA Loans After Bankruptcy

By Joe Wallace

A reader asks a question about FHA loans and bankruptcy; “It will be two years since my bankruptcy discharged. I want to get a home and I am reading that the FHA will turn you down for post-bankruptcy late payments. Is this true?” According to the FHA official site at FHA.gov, the general rules for FHA loans post-bankruptcy include the following: “The FHA is generally more flexible than conventional lenders in its qualifying guidelines. In fact, the FHA allows you to re-establish credit if: – two years have passed since a bankruptcy has been discharged – all judgments have been paid – any outstanding tax liens have been satisfied or appropriate arrangements have been made to establish a repayment plan with the IRS or state Department of Revenue – three | more...

 

January 17, 2012

FHA Loan Reader Question: Do I Qualify For an FHA Mortgage?

By Joe Wallace

FHA loans have minimum credit standards which include requirements for timely bill paying, dependable work history and other factors that can affect an FHA mortgage application. But FHA rules are designed to be flexible depending on a borrower’s circumstances. In general the FHA rules tend to be more forgiving when borrowers can show that financial difficulties were beyond the borrower’s control and have been resolved successfully. With that in mind, we turn to a recent question from one of our readers: “I am looking to buy, my current residence from a family member.

 

January 16, 2012

FHA Condo Loans

By Joe Wallace

Recently we’ve gotten a few reader questions about FHA condo loans. It’s true that the FHA will insure a condo loan for projects that are approved by HUD/FHA. Here are some facts about FHA condominium loans and the requirements for them. Condo Loans Are Different Than Suburban Home Loans By its very nature, FHA condo loans are unique compared to the ownership issues connected with a typical suburban home. According to the FHA official site, “Condominium ownership is different from other forms of home ownership.

 

January 13, 2012

FHA Loan Reader Question: Irregularities in the FHA Loan Process

By Joe Wallace

The FHA has rules which must be followed in order for participating lenders to legally take part in the FHA loan guaranty program. There are also federal laws which apply to all lenders above and beyond FHA regulations. With this in mind, we reviewed a reader comment/question which came in recently: “A friend of ours just told us she is closing on an FHA loan tomorrow.

 

January 12, 2012

FHA Loans: Can I Change the Terms of Sale Agreement?

By Joe Wallace

The FHA provides many helpful resources for homebuyers on its official site at FHA.gov. One of those resources is an online version of a HUD/RESPA booklet called “Buying Your Home” which includes a section on settlement costs. One of the first portions of this booklet a prospective FHA mortgage loan applicant will read includes the following: “The real estate broker probably will give you a preprinted form of agreement of sale. You may make changes or additions to the form agreement, but the seller must agree to every change you make. You should also agree with the seller on when you will move in and what appliances and personal property will be sold with the home.” The second sentence contains a revelation for some borrowers–some loan applicants simply assume that | more...

 

January 12, 2012

FHA Refinance of Borrowers in Negative Equity Positions Program

By Joe Wallace

The continued housing market slump has many borrowers struggling with mortgage payments and facing what is technically called a “negative equity position”, which means the borrower owes more on the property than the home is worth on the market. This is also known as being “upside down” on a mortgage. FHA borrowers who find themselves owing more than they could reasonably sell the home for are in a tough position when it comes time to decide whether to keep the home or try to ride out difficult financial circumstances, but for some borrowers there’s an option available in the form of a recent FHA loan refinancing program. The FHA

 

January 11, 2012

FHA Loan Limits: Family Member Purchases

By Joe Wallace

Recently we posted about FHA loan limits and something called “identity of interest” transactions, which the FHA official site describes as “a sale between parties with family or business relationships.” For example, if a business partner wanted to sell property to a fellow partner, that could constitute an “identity of interest” transaction. The same would be true of family members selling to other family members. According to FHA loan rules, the “maximum loan-to-value (LTV) factor for identity-of-interest transactions on principal residences is restricted to 85%.” That means the borrower would be approved for the FHA home loan, but only for 85% of the value of the property. Fortunately for many borrowers, the FHA has exceptions to this 85% rule. “Financing above the 85% maximum for identity-of-interest transactions is permitted under | more...