Articles Published in: April 2015

April 24, 2015

FHA Refinance Loans For Investment Property? A Reader Question

A reader asks, “I have rental property with a mortgage balance of $26000. The property shows a current value of $98900. I would like to refinance but seem to have a problem getting it refinanced? What would you advise me to do in order to utilize my equity to finance another investment.” The scope of this blog is FHA single-family home loans, and we answer questions about FHA loans with that scope in mind. Non-FHA loan related questions that deal with general finance topics may or may not be outside our range of topics. The reader question above may have been submitted under a mistaken assumption that the FHA single family home loan program might include refinance loans (which it does) for investment properties or other non owner-occupied residences (which | more...

April 23, 2015

FHA Loan Rule Questions: Chapter 7 Bankruptcy

By Joe Wallace

A reader asks, “I had a Chapter 7 Bankruptcy discharged on 09/16/13. My home was not included in the BK. I have owned the home for 3 years and have never missed or been late on a payment. We are considering selling our current home and purchasing another one closer to where my wife and I work.” “We have over $100,000 in equity in our current home. We have a combined income of $240,000 a year. We have reestablished our credit and have scores in the high 600′s. We currently have an FHA loan. What is the waiting period to qualify for another FHA loan after CH. 7 BK discharge? I have heard 2 years. Is there any way to reduce this time?” The FHA has a Frequently Asked Questions | more...

April 23, 2015

FHA Loan Mortgage Rate Trends: Flat Overall

By Joe Wallace

Since our last report, mortgage loan rates have been flat overall, with the exception of yesterday’s move which saw rates moving higher. Many market watchers and industry professionals have categorized rate behavior as of late as “flat”, “in a rut” and with yesterday’s shift higher, “breaking free in the wrong direction”. It’s said that after a sustained period with no real movement, a push higher is not unusual. 30-year fixed rate conventional mortgages are hitting, best execution, 3.75% territory depending on the lender. We’ve seen FHA mortgage loan rates break into a new range with 3.375% as the bottom and 3.5% as the high end of this best execution range. That’s up from the previous 3.25% – 3.5% range reported last week. Remember, the term “best execution” refers to rates | more...

Can I buy a manufactured home with an FHA loan?

April 23, 2015

FHA Loan Income Rules: A Reader Question

By Joe Wallace

A reader asks, “Where I can find the income limits on FHA loans, if customer is buying for the first time?” This reader question implies two misconceptions about FHA home loans. The first is that there is a preference, advantage, or other special treatment given to first time FHA loan applicants or first-time home buyers. This is not true insofar as the FHA single-family home loan program itself is concerned. It’s true that there may be state or local programs in the borrower’s zip area that might be available to help first time home buyers. It may also be true that some financial institutions offer first time home buyer programs. But the FHA loan process itself shows no preference, gives no special benefits to a borrower who has never applied | more...

April 22, 2015

FHA Loan Employment Rules: A Reader Question About Changing Jobs

By Joe Wallace

A reader asks, “Would I still be eligible for an FHA Loan if I accept a position that with a higher salary with a different employer? Ive been on my current job for almost 7.5 years. My new and current positions are in different fields. However, the new position is in the same field as that I was in prior to my current job. I was told that longevity on the job was part of the criteria aside from creditworthiness, debt/income, etc. I dont want to miss this opportunity to purchase a home and I dont want to miss this job opportunity.” Let’s examine what FHA loan rules have to say on this subject–part of the answer to this reader question is found in Chapter Four, Section D of HUD | more...

April 22, 2015

FHA Loans For Mixed Use Properties: A Reader Question

By Joe Wallace

Many of our reader questions posted in the comments section here come from loan applicants and home buyers, sometimes even sellers, all wanting to know more about certain aspects of the FHA loan process. But one recent question comes from a lender, who asks: “Customer had bankruptcy chapter 7- discharged 1-2012. Wants to but a home that has a convience store attached to it. Can I do the loan with 5% down and count the income from the store?” FHA loan rules for mixed-use property appraisals address this issue. HUD 4150.2 Chapter Three states: “A qualified property must be predominantly residential in use and appearance. Any nonresidential use of the property must be subordinate to its residential use, character and appearance. A property, any portion of which is designed or | more...

April 21, 2015

FHA Loan Closing Costs

By Joe Wallace

One common question asked about FHA home loans involves closing costs. Many FHA borrowers want to know how much to expect in the form of closing costs, but the simple answer to these question is, “it all depends”. Depending on what? No two housing markets are the same, and no two lenders are exactly the same either. The amount of closing costs you have to pay will vary based on these factors plus how state law may affect your transaction, possible property tax issues, how much is charged in your local area for certain services rendered, etc. Cost of services may vary, but the FHA has built in some protections for the borrower when it comes to those charges. HUD 4155.2 Chapter Six has some things to say about closing | more...

April 21, 2015

FHA Loans and Divorce: A Reader Question

By Joe Wallace

A reader asks, “My soon to be ex is on the deed but we’re both on the mortgage. He is working with the bank to complete a DIL. Do I have to be notified or agree to this since I’m on the mortgage? If the bank is going to forgive the debt shouldnt i know whats going on? I currently live in the house and concerned I will be evicted without warning.” While there are a number of factors that may affect how an FHA mortgage loan is handled when a married couple is in the process of getting legally divorced, it should be pointed out that all parties that are legally/financially obligated on an FHA home loan have the right to contact the lender in such cases to get | more...

April 20, 2015

FHA Home Loans and Your Credit Report: Disputing Errors

By Joe Wallace

Some borrowers who want to apply for an FHA loan find their applications held up by problems with what is on their credit report. Are you finding outdated or even erroneous information on your report? There is some good advice for those who find themselves in this predicament, thanks to a government website called ConsumerFinance.gov. A page there titled, “How do I dispute an error on my credit report?” has some very good advice about corrected errors on your credit report, starting with: “Contact both the credit reporting company and the company that provided the information. You should explain what you think is wrong, why, and include copies of documents that support your dispute.” When you deal directly with a creditor, there are certain types of disputes the credit will | more...

When Is An FHA Loan Better Than A Conventional Loan?

April 20, 2015

FHA Home Loan Rules On Fair Housing

By Joe Wallace

April is Fair Housing Month, and the FHA/HUD official site has a variety of resources for borrowers who want to know more about Fair Housing Act laws, and how such laws pertain to both borrowers and lenders. The FHA and HUD are quite serious about equal access to housing, but what do FHA home loan rules say about Fair Housing rules and how are participating FHA lenders expected to comply with those rules? HUD 4155.2 Chapter One, Section B has some important guidelines: “HUD is responsible for enforcing the Fair Housing Act. The Fair Housing Act, contained in 42 U.S.C. 3605, prohibits discrimination in residential real estate-related transactions, such as • making or purchasing loans or providing other financial assistance, and • the terms and conditions for making available loans | more...