Articles Published in: January 2015

January 13, 2015

FHA Loans And Tax Liens: A Reader Question

A reader asks, “How does FHA view a borrower with an expired tax lien? I was assessed additional taxes as the result of an audit in 1999. In 2005, a Federal tax lien was filed. I recently retained a tax attorney, who has confirmed that the lien was released in 2011 due to expiration/statue of limitations. I would now like to pursue FHA purchase financing. Assuming all other requirements are met, will this expired lien disqualify me?” FHA loan rules do address tax liens–the information can be found in HUD 4155.1. According to Chapter Four: “If, after checking public records, credit information or CAIVRS, a borrower is found to be presently delinquent on any Federal debt or has had a lien (including taxes) placed against his/her property for a debt | more...

January 12, 2015

FHA Loans, Short, Sales, and Missed Payments: A Reader Question

By Joe Wallace

A reader asks, “If we do a short sale and are current on our mortgage, can we still get an FHA loan if we had any other late payments during the year? It is confusing because in one section it says “current on mortgage and other installment loans” and in all other places it just says “current on Mortgage.” FHA loan rules make it clear that lender discretion is an important factor in situations like these. In general, FHA loan rules say that a lender may permit a borrower with a short sale to apply for a new FHA loan without a waiting period IF the borrower was current on the previous mortgage loan at the time of the short sale. That said, lender standards still apply when it comes | more...

January 12, 2015

FHA Loan Application Requirements: A Reader Question

By Joe Wallace

A reader asks, “My husband and I are trying to pay off debt and raise our credit scores to buy a home. Is there a program to help with a down payment? What are the steps needed to get approved for fha loan?” The FHA itself does not provide a downpayment assistance program, but one may be available at a state or local agency. The FHA does have a list of state information that can help you learn what home buyer/home ownership resources might be available near you. You can look up this list at http://portal.hud.gov/hudportal/HUD?src=/states. Steps to an FHA home loan include planning and preparation–you should research the housing market where you want to purchase the home, examine homes for sale you want to purchase and other steps, but one | more...

January 10, 2015

FHA Clarifies Mortgage Insurance Premium Cuts

By Joe Wallace

When the FHA announced mortgage insurance premium cuts in the annual, mortgage insurance premium (MIP), there was a preliminary announcement on Thursday January 8th, with details promised to follow. Now the FHA has issued a Mortgagee Letter announcing specifics of those MIP cuts. FHA Mortgagee Letter 2015-01 states, “This Mortgagee Letter (ML) communicates revised annual MIP rates for FHA Title II forward mortgages and provides opportunity for cancellation of existing case numbers in order to utilize the MIP rates contained in the ML.” The new rules are effected for FHA loan case numbers assigned on or after January 26 2015. According to the mortgagee letter, the new FHA policy “reduces the rate for annual MIP for all Title II forward mortgages, with terms greater than 15 years, except; –single family forward streamline | more...

January 9, 2015

FHA Announces Mortgage Insurance Premium Cut

By Joe Wallace

Some homeowners who purchased homes with FHA loans could save as much as $900 a year thanks to a reduction in the FHA mortgage insurance premium announced by the FHA and HUD. An FHA/HUD press release (HUDNo. 15-001) announced the change, which could take effect as early as the end of the month. According to the release, “As the nation’s housing market continues to improve, U.S. Housing and Urban Development Secretary Julián Castro today announced the Federal Housing Administration (FHA) will reduce the annual premiums new borrowers will pay by half of a percent.” Half a percent may not sound like a lot to some, but according to the FHA official site, that half-percent reduction “is projected to save more than two million FHA homeowners an average of $900 annually | more...

January 9, 2015

FHA Mortgage Loan Applications: A Reader Question

By Joe Wallace

A reader asks, “My husband and I live in Texas and want to buy a home. My husband makes around $40,000 a year and has decent credit. I am self employed so my tax return shows I only make around 25,000 a year after deductions. All of the debts are in my name and I have the better credit score. My question is, wouldn’t it be better to put the home loan in his name only being that he has no debt? Can we get an FHA loan in his name only?” It’s true that FHA loan rules differ for self-employed borrowers. You may be required to furnish additional documentation along with the usual FHA loan paperwork–profit and loss statements, business tax documents, anything that can show the borrower has | more...

January 8, 2015

FHA Mortgage Loan Closing Costs: Prepaid Items, Per Diem Interest

By Joe Wallace

In our last post, we answered a reader question about FHA loan closing costs. This type of question is important for borrowers to ask as the answers can help you save and prepare for the costs of getting a home loan. There are several items a borrower may be required to pay at or before the loan closes in order to finalize the transaction. Some of these items include pre-paid expenses such as per diem interest, and discount points (when the borrower chooses to pay these points). Pre-paid expenses are defined in HUD 4155.1 Chapter Five as follows: “Prepaid items are collected at closing to cover  accrued and unaccrued hazard insurance premiums  mortgage insurance premiums  taxes  per diem interest, and  other similar fees and charges.” | more...

January 8, 2015

FHA Loan Closing Costs: A Reader Question

By Joe Wallace

A reader asks, “What are the required closing costs for the buyer and seller?” The answers to this question depend on what the buyer and seller have agreed to. Sellers are limited with respect to contributing goods, costs or related contributions to six percent of the sales price or appraised value of the property (whichever is lower). Closing costs may vary depending on the transaction, the housing market, the lender, etc. There is no fixed dollar amount on closing costs that can be quoted in a general way, but we can examine the FHA loan rulebook to see what is required by FHA regulations. This information is found in HUD 4155.1 Chapter Five, which states: “Lenders may charge and collect from borrowers those customary and reasonable costs necessary to close | more...

January 7, 2015

FHA Loan Eligibility: A Reader Question

By Joe Wallace

A reader asks, “I have just started building my credit I have never had credit before in the past but do now I checked my score and it’s a 680 I do have two credit cards and my payments have always been paid on time.” “I don’t know much about credit but I’m very interested in buying a home I am self-employed I have a store in New Bedford for the past 9 years I also rent the apartment upstairs from my store just wondering would I be eligible for finance a foreclosed home with an FHA loan now I’ve had my credit for a year now…” When applying for a home loan, a participating lender will likely be looking for a credit score of 620 or better and one | more...

January 7, 2015

FHA Mortgage Rate Trends In Early 2015: Decisively Lower

By Joe Wallace

Mortgage rates in general moved within a narrow range of numbers in 2014, and with the anticipation of the new year, many hoped to see rates take a turn for the better and move below what seemed to be the floor in 2014 for rates. And now in the early days of the new year that seems to be happening. Best execution mortgage loan rates–which are not available to all borrowers or from all lenders–have dipped into the mid three percent range going down to an impressive 3.625% for the most qualified borrowers. That’s the rate for 30-year fixed rate conventional mortgage loans, best execution. That rate is offered to borrowers depending on FICO scores, loan repayment history and other financial qualifications. But what about FHA mortgage loan rates? Are | more...