Articles Published in: October 2014

October 31, 2014

FHA Loans: What Can Affect Your Loan Amount?

One of the first questions on the minds of many borrowers is a logical one: “How much can I borrow?” There’s no single answer for this as county loan guaranty limits apply, and in general the amount of the FHA home loan is based on the sale price of the home or the appraised value, whichever is lower. When it comes to home loan refinancing, the appraised value of the property is very important. There are factors that can affect the amount of the FHA home loan for new purchases or refinance loans beyond those factors. For example, if you choose to finance allowable fees and expenses (including some discount points depending on the transaction and lender policies) your loan amount will increase. If you make a larger down payment, | more...

October 30, 2014

FHA Loans and Earnest Money: A Reader Question

By Joe Wallace

A reader asks, “I have a property listed and in escrow with an FHA buyer who was so confident that she would get the loan (the lender provided a fully approved letter, contingent on final review and appraisal), that she agreed to unconditionally release the EMD to my seller.” “Long-story-short, the buyer decided that in light of suspicions that she might not be approved in the final review, she would cancel the loan process and kill the deal. Now she wants her released EMD back and her agent claims there are FHA regulations that demand the return. I cannot find them. Do they exist? What do they say?” The reader doesn’t specify, but we assume the acronym “EMD” stands for “earnest money deposit”. With that in mind: This is a | more...

What you should know about FHA 203(h) Loans For Disaster Victims

October 29, 2014

FHA Mortgage Rate News: Rates Move Higher After Fed Announcement

By Joe Wallace

Our discussion last week of mortgage rate trends going into this week’s Fed announcement included the notion that mortgage rates might retreat into a defensive posture–defensive as in, little change (if any) in the two trading days leading into Wednesday’s scheduled announcement by the Fed. When the word came from the Fed on Wednesday, talk included the end of the Fed’s Quantitative Easing (QE) program. QE saw the government putting billions of dollars into markets in order to help stabilize the nation economically. Those investments affected mortgage rates, but when talk began of tapering off the program and eventually ending it, investor reaction was negative. Mortgage loan rates can and did move higher with more talk of the ifs and whens of the end of that program. Today following the Fed | more...

October 29, 2014

FHA Loan Rules and Seller Costs: A Reader Question

By Joe Wallace

A reader asks, “What costs will a seller incur if a buyer is using an FHA loan to purchase?” That is a difficult question to answer for a variety of reasons–state real estate law, lender requirements and FHA loan rules all have a say in the closing costs of a FHA home loan. There’s no itemized list of seller costs listed in the FHA loan rulebook, HUD 4155.1, but the FHA does make a list of certain costs and/or seller contributions to the sale that are and are not permitted. For example, the borrower is not to be charged for pest/termite inspections. The borrower can’t pay for the lender’s legal counsel, and the FHA has a set of regulations that dictate how much the seller can contribute toward the sale | more...

October 28, 2014

FHA Appraisals and Leaking Roof Issues: A Reader Question

By Joe Wallace

A reader asks, “My daughter bought home with FHA approved loan FHA appraisal did not said roof is in bad condition. After 4 months roof is leaking in 4 spots. She called roofing company to see what’s going on and they said roof should be replaced but with FHA regulations roof should last at least 2 years. What should she do now?” The FHA and HUD address this specific issue in a document for FHA loan applicants titled, “For Your Protection, Get A Home Inspection“. It says in part: “An appraisal is different from a home inspection. Appraisals are for lenders; home inspections are for buyers. An appraisal is required to: — Estimate the market value of a house; — Make sure that the house meets FHA minimum property standards/requirements; and — Make sure | more...

October 27, 2014

FHA Minimum Property Requirements: Acceptable Wells

By Joe Wallace

A reader asks, “I just inspected a home with a buried point well. Public water is not available. This type of well is common and legal in th area. Is this an acceptable well for FHA guidelines. No survey was provided so it is impossible for me to determine well location and distance from the septic.” FHA loan rules in this area tend to defer to the local authority. The FHA does not have detailed rules for wells that would cover all situations. The key to the acceptability of wells in connection with an FHA appraisal depends greatly on whether the wells are acceptable to the local authority. It’s impossible to determine the nature of an individual well mentioned in a reader question, but in general borrowers should know that | more...

October 24, 2014

FHA Loan Refinancing: A Reader Question

By Joe Wallace

A reader asks, “We currently have a FHA loan on our house and our mortgage company says we can not do a refi with a adjustable rate even know we will not be in our house 5 yrs or more. and now we have a 4.75 fixed rate for 30 yrs so what is our best option to get a lower rate cause we will be taking our retirement and social security in the next 2 months and will be in a hardship crisis.” This is a difficult reader question to answer. There are many reasons why a borrower could be turned down for a refinance loan, and some of those reasons can depend on the type of refinancing being applied for–cash out refinancing, for example, may be difficult for | more...

October 23, 2014

This Week’s FHA Mortgage Rate Trends

By Joe Wallace

This time last week, we reported mortgage rates headed for lower territory thanks to a variety of factors including market volatility. This week, the difference was definitely noticeable, with rates holding steady or edging slightly higher, but still maintaining at-or-below 4% rates for 30-year fixed rate conventional loans (best execution). FHA rates held steady at 3.5% best execution. While FHA mortgage rates have managed to stay at 3.5% this week, how long that could number may persist? Next week is poised to be an important one for rates in the short term. Why? There are a number of reasons why conditions might lead interest rates upward, but one of the most anticipated things scheduled for next week is the Fed announcement–a regular occurrence that can and often does push rates depending on | more...

October 23, 2014

FHA Loan Interest Rates: The Rate Lock

By Joe Wallace

We write weekly, sometimes more frequently, about the state of FHA loan interest rates. We discuss trends, terminology, and the possible future of those rates. But some potential FHA borrowers are confused by terms like “locking” and “floating”. What does it mean to get an interest rate lock on an FHA mortgage loan? Let’s start by examining the basic rules of negotiating FHA rates on the loan. According to the FHA loan rulebook, HUD 4155.1, the lender and borrower are expected to come to an agreement on interest rates on the loan–the FHA does not set the rates. “Under all currently active FHA single family mortgage insurance programs, the borrower and the lender negotiate the interest rate and any discount points.” That’s found in the opening chapter of HUD 4155.1. | more...

October 22, 2014

FHA Loans, Foreclosure, and New FHA Loan Applications: A Reader Question

By Joe Wallace

A reader asks, “I was a cosigner on a FHA loan in 2007 and my ex-boyfriend let the home go into a foreclosure process, the home was paid in full before it was foreclosed. it has been a year that the home has been paid off. Will I still be able to qualify for a FHA loan now? My credit score is good and I have all bills paid up to date including credit cards.” This is a situation that may or may not have applicable FHA loan requirements depending on the circumstances of the foreclosure. Since the reader indicates that the foreclosure didn’t actually happen, there may be a gray area that’s not fully addressed by FHA loan rules. However, lender standards may play a big part in whether | more...