Articles Published in: January 2015

January 7, 2015

FHA Loan Rules: FICO Scores

Many FHA loan applicants want to know what the FHA loan minimum FICO score requirements are, but did you know that FHA loan standards are only part of the equation? The lender will also have minimum FICO scores as a requirement–these minimums may match the FHA standards or exceed it. In many cases a borrower will find the lender has more stringent standards than the FHA. What are the FHA minimum FICO score requirements? The rules for FICO scores on FHA new purchase home loans and refinance of those loans can be found in HUD 4155.1, which gives instructions to lenders on how to process FHA loans. That table above is reprinted from HUD 4155.1, and as you can see, FICO scores of 580 and above are technically eligible for | more...

January 6, 2015

FHA MIP Refunds Part Two: Exceptions

By Joe Wallace

In a recent post, we discussed a reader question about FHA Mortgage Insurance Premiums and the refunds that may be due some FHA borrowers at loan payoff time. The reader asked, “I like to know why FHA MIP don’t send any refund after pay off of my FHA loan pay off 4 months ago.” We replied that FHA borrowers, “may or may not be eligible for a mortgage insurance premiun refund depending on circumstances, but assuming the reader is eligible for a refund, consider the advice found on the FHA official site at www.FHA.gov:” “If you do not receive a check or an application within 45 days after you have paid off your loan, check with your mortgage company to confirm that they have sent HUD a request to terminate the | more...

January 6, 2015

FHA Loan Rules: New Loans Following Short Sales

By Joe Wallace

A reader asks, “How long is the waiting period after a short sale?” There are two standards that may apply. One is the lender’s standards which may or may not go beyond FHA minimum requirements. For that you would need to discuss your situation with a loan officer. But the FHA minimum standards are very clearly defined in FHA Mortgagee Letter 09-52, which begins by saying: “Borrowers are not eligible for a new FHA mortgage if they pursued a short sale agreement on his or her principal residence simply to • take advantage of declining market conditions, and • purchase, at a reduced price, a similar or superior property within a reasonable commuting distance.” That said, borrowers may be eligible for a new FHA loan without a minimum wait time (according to | more...

January 5, 2015

FHA Loan Mortgage Insurance Refunds: A Reader Question

By Joe Wallace

A reader asks, “I like to know why FHA MIP don’t send any refund after pay off of my FHA loan pay off 4 months ago.” FHA borrowers may or may not be eligible for a mortgage insurance premium refund depending on circumstances, but assuming the reader is eligible for a refund, consider the advice found on the FHA official site at www.FHA.gov: “If you do not receive a check or an application within 45 days after you have paid off your loan, check with your mortgage company to confirm that they have sent HUD a request to terminate the mortgage insurance on your loan. If they confirm that the correct termination information was sent, contact HUD. If you do not receive a refund or any other documentation from HUD | more...

January 5, 2015

FHA Loan Reader Questions: Zero Down Payment Home Loans

By Joe Wallace

A reader asks, “I am wanting to know the best way for me to purchase a house with no down payment. Many years ago had a home through an FHA loan, due to divorce we resolved the case. I found a home I would like to have in the country posey road, 5 acres, nice home all new flooring, simple but a very nice home.” “Can you tell me how to go about getting a loan with no down payment and how I can see if you can consider the home I want meets your requirements etc. I’m on Medicare/disabled with an income.” HUD 4155.1 Chapter Five Section B directly addresses this reader question, assuming the question is about FHA loans in general. We can’t speak to non-FHA mortgage loans, | more...

January 3, 2015

FHA Home Loans and The Fair Housing Act

By Joe Wallace

We have written a great deal in this space about FHA home loans and how they are affected by the Fair Housing Act, which governs fair lending practices connected with home loans (among many other things). The Fair Housing Act governs all housing transactions in the United States and violations of this federal law are, when reported, investigated and prosecuted accordingly. How does the Fair Housing Act work? According to the FHA and HUD official site, “Federal law prohibits housing discrimination based on your race, color, national origin, religion, sex, familial status, or disability.” What doe these terms mean? Race discrimination can be fairly obvious, but questions of sex, family status or disability are often harder to define. An applicant cannot, for example, be denied a home loan or a | more...

January 2, 2015

FHA Mortgage Rate Trends: The End of 2014

By Joe Wallace

With 2014 now over, many look ahead to the new year’s potential trends for FHA mortgage loan rates and refinance loan rates. But looking ahead also means looking back–what happened at the end of the year is sure to be a factor in figuring out where rates could go in early 2015. Mortgage rates over 2014 moved within a narrow range, but that range was marked by lower rates–when the FHA best execution rate broke below the four percent range and into the high threes, at first some thought it might just be a flash-in-the-pan move soon overtaken by upward pressure on rates. But what was potentially a quick dip into the high three percent range (best execution) turned into a downward trend that ended up in a comfort | more...

January 2, 2015

FHA Appraisal Rules: A Reader Question

By Joe Wallace

A reader asks, “My husband and I were just approved for a FHA loan or a RD loan, but we are being told the house doesn’t qualify because the basement only has small windows (no step outs and no door leading outside). The basement contains two bedrooms, a living room and a laundry room. Is there anyway to modify the basement to ensure the house qualifies?” The FHA appraisal would recommend corrections or repairs in such cases based on FHA minimum property requirements and/or state/local building code. Much depends on building code requirements for your state or local area. Borrowers who find themselves in these situations would need to consult the local authority to see what is required there-the FHA doesn’t keep records of all state or local building code | more...

January 1, 2015

Happy New Year 2015!

By Joe Wallace

Happy New Year 2015! We hope your holiday season has been safe and fun. We pause from our usual posts about FHA home loans and answering reader questions about them to enjoy the holiday. Our regular posting schedule resumes on Friday. Thanks for reading and have a great holiday.