Articles Published in: February 2015

February 23, 2015

Getting Started With FHA Loans: A Reader Question

A reader asks, “Im interested about information about FHA im a single mother also wanted to know if any help for military Mom my son is sergeant in the Marines im tired of living in apartment please help.” We get many comments/questions just like this and in every case our answer is the same–there is definitely help available from the FHA, and they do have programs designed to assist newcomers to the FHA loan process. The FHA official site is a great place to begin–consider what the FHA loan official site says about getting started with an FHA loan on the page titled, “Let FHA Help You”: “FHA loans have been helping people become homeowners since 1934. How do we do it? The Federal Housing Administration (FHA) – which is | more...

February 21, 2015

FHA Loans For Investment Property? A Reader Question

By Joe Wallace

A reader asks, “I have a grand daughter who is looking to buy a fore close house asking only 12, 000.00.. Is there a program out there to help her. some one had started doing repairs to the house. a new bathroom, up dated kitchen tile kitchen and bathroom floors. She wants to use this property as a investment.” The FHA single family home loan program is intended for owner-occupied residences only, so the basic answer to this question (where FHA single family home loans are concerned, which is the focus of our blog) is no–at least for new purchase home loans (see below for more information). That’s not to say that the borrower might not be able to find some state or local program made available to investment property | more...

February 20, 2015

FHA Loan Rules Following Short Sales: A Reader Question

By Joe Wallace

A reader asks, “We (had a)Bankruptcy and then a short sale 2 years later. We never re-affirmed the mortgage but it was sold to another company. The original lender reported us discharged, no late payments, but the second company reports us 60 days delinquent, settled for less than owed. When can we apply for a new mortgage? Do we go from the Bankruptcy discharge or the short sale? Do we qualify for the “no late payments” program with less waiting time? We can’t get anyone to give us a straight answer.” The answer may depend on lender standards. FHA loan rules do permit a borrower to apply for a new loan following a short sale depending on circumstances but being current on the mortgage loan at the time of the | more...

February 20, 2015

FHA Equal Access Loan Rules Updated

By Joe Wallace

In recent weeks, we’ve reported on the FHA and HUD’s update to Equal Access guidelines as listed in FHA Mortgagee Letter 2015-05. One important area of that mortgagee letter we haven’t written about yet is the FHA and HUD’s authority for changing its Equal Access rules. To review, ML 2015-05 was issued to update its rules for Equal Access for all regardless of sexual orientation or gender identity. According to the mortgagee letter: “On February 3, 2012, HUD published a final rule entitled Equal Access to Housing in HUD Programs Regardless of Sexual Orientation or Gender Identity (77 FR 5662) (“Equal Access Rule or “rule”). The final rule ensures that housing across HUD programs are open to all eligible individuals regardless of actual or perceived sexual orientation, gender identity, or | more...

February 19, 2015

Is It Too Early To Apply For A New FHA Loan? A Reader Question

By Joe Wallace

A reader asks, “We Were discharged and our chapter 13 was completed in Dec of 2014… Our Credit scores are already in the 700′s and we want to sell our current home (never a late payment) and purchase another with a huge down payment from the equity in our current home + some savings. Is it to early to apply for a FHA Loan?” FHA loan rules say that in general, a lender may consider a borrower for a new FHA home loan following a Chapter 13 bankruptcy IF the borrower has made reliable payments on the plan created by the Chapter 13 bankruptcy for a period of one year. Eligibility is not automatic–those payments must be verified and the applicant must have written permission from the court to apply | more...

February 19, 2015

FHA Loan Reader Questions: Loan Repayment History

By Joe Wallace

A reader asks, “I had to get a hard loan to buy my property. Have paid faithfully and am building credit, in the 700′s. Never had bankruptcy or any of that. Divorced mother with own business. Property has substantial equity now. To boost up chances to refi, will they (underwriter) investigate hard loan mortgage responsibility and history to boost refi chances of being approved?” Lender standards vary, but in general all lenders want to examine a borrower’s history of repayment on financial obligations to determine a borrower’s creditworthiness. Let’s examine the FHA’s stance on the issue of timely payments and establishing a solid payment history. What follows is from the FHA loan rulebook, HUD 4155.1 Chapter One: “The purpose of underwriting is to determine a borrower’s ability and willingness to | more...

February 18, 2015

FHA Mortgage Rate Trends: Worse, Then Better

By Joe Wallace

In 2015, saying that mortgage rate performance is “bad” is a bit like saying a slice of cake is mostly delicious–that is to say that in spite of upward pressure on mortgage loan rates, we’re still looking at best execution rates below four percent, and overall that’s a very good thing. 30-year fixed rate conventional loans edged all the way down to a best execution potential of 3.5% for some of the most qualified borrowers, and FHA mortgage loan rates have up until only very recently persisted in a best execution comfort zone of3.25%. Last week, going into a three-day holiday weekend we saw mortgage rates (best execution) struggling. Blame Friday the 13th, blame Greece and the EU situation, or simply refuse to look for a specific reason and concentrate | more...

February 18, 2015

FHA Loan Facts

By Joe Wallace

There are plenty of myths about FHA home loans–it’s easy to misunderstand parts of this important loan program if you’re new to it, but knowing some basic facts can help you better understand what an FHA home loan has to offer you compared to conventional mortgage loans. Fact: FHA loans are NOT just for first-time home buyers. FHA loans don’t provide any advantage or disadvantage to a loan applicant based on your status as a first-time home buyer or first-time FHA borrower. All qualified borrowers are eligible for the same types of FHA loan programs. Your interest rate and other terms may vary depending on your financial qualifications. Fact: FHA loans have no income limit. Some people assume that FHA home loans are intended for financially disadvantaged borrowers, but this | more...

February 18, 2015

FHA Loans and Other Major Credit Applications: A Reader Question

By Joe Wallace

A reader asks, “I was hoping to get an FHA loan but I was wondering if my father could cosign? I was also wondering if it would be feasible of me to get a new car. (My current vehicle is giving me serious problems)” FHA loans do permit non-occupying co-borrowers and co-signers. Talk to your loan officer about lender standards in this area, but in general when a family member co-signs or co-borrows there are procedures and considerations. FHA loan rules say that in cases where the LTV exceeds 75%, a loan with a non-occupying co-borrower is limited to a single unit property. The other part of the reader question isn’t quite clear–is the reader asking if the FHA loan can include the purchase of a vehicle? The answer is | more...

February 17, 2015

FHA Loan Questions: “Substitute Forms of Credit”?

By Joe Wallace

A reader asks, “My question is what would be a substitute form of credit?” Since this question was asked in response to our blog post, “FHA Loan Credit Report Rules”, it’s probably safe to assume the reader is asking whether the FHA will permit the lender to consider alternative credit or non-traditional forms of credit in cases where the borrower has either no credit history, or a lack of traditional credit. From our original post: “HUD 4155.1 Chapter One has rules and instructions for the lender in these areas. Under “Required Credit Information” we find the following: “A credit report submitted with a loan application must contain all credit information available in the accessed repositories. Additionally, for each borrower responsible for the debt, the report must contain all of the | more...