Articles Published in: April 2015

April 18, 2015

FHA Loan Rules For Income: Is There A Maximum Limit?

A reader asks, “I was prequalified for an FHA loan and during escrow, my agent said I made too much money to be eligible for the loan. Does that make sense?” The simple answer to this question is no, the notion that a borrower makes too much money to qualify for an FHA mortgage loan does not make sense. But let’s examiner what official FHA and HUD documents say about the single-family FHA loan program: “If you are buying a home, refinancing a mortgage for a home you already own, or making home improvements, you may qualify for an FHA-insured mortgage. In fact, almost anyone who has a satisfactory credit record, enough cash to close the loan, and sufficient steady income to make monthly mortgage payments can be approved for | more...

April 17, 2015

FHA Home Loans: What Is CAIVRS?

By Joe Wallace

In our last post, we answered a reader question about trouble with an FHA home loan associated with information found in the CAIVRS system. One of the important aspects of that reader question is the definition of what CAIVRS is and how data found in that system could affect an FHA mortgage loan application. The FHA official site has a Frequently Asked Questions section that addresses CAIVRS, which stands for Credit Alert Verification Reporting System. This is a system maintained by the federal government that, as the FHA official site explains, “lists persons who have defaulted or had a loan foreclosed within the last three years on a debt owed to the Federal government or are currently delinquent on a debt owed to the Federal government.” Examples of what the | more...

April 17, 2015

FHA Loans After Foreclosure, CAIVRS, and Lender Standards: A Reader Question

By Joe Wallace

A reader asks, “We have some questions regarding applying for a mortgage. we have extenuating circumstances that are keeping us from being approved and so we are looking for some direction. First my income, I am a Rn working through an agency therefore, a large portion of my weekly pay in non taxed. The first lender could not verify my income because my w2 is less then my take home pay. We went with another mortgage broker and they were able to verify my income. Then as we were going through the process, our CAIVRS # was declined.” “We cleared it up with FHA and they gave us the green light to proceed with a mortgage, however, our lender is still declining us . What happened was we had a | more...

April 16, 2015

FHA Mortgage Rate Trends–Mostly Improving Since 9 April

By Joe Wallace

On April 9, 2015, mortgage rates moved higher than they had been all month–not saying much since the month was only nine days old, to be sure. But since that time, rates have improved. There have been some ups and downs (yesterday mortgage rates experienced some weakness depending on the lender, but overall in the last four business days we’ve seen improvements.) but overall we’re still seeing rates holding at or near levels we reported last time. 30-year fixed rate conventional mortgages have been, at the time of this writing, at or near 3.625% (best execution), but in a range that tops out at 3.75% (again, best execution and depending on the lender). FHA mortgage loan rates are holding in a comfort zone between 3.25% and 3.5% best execution. Until | more...

April 16, 2015

FHA Loan Rules For Single Family Homes: What You Can and Cannot Buy

By Joe Wallace

How much do you know about buying a home with an FHA mortgage? Do you know the kinds of property you can and cannot buy with an FHA loan? Here is a little list of what’s possible and what’s not. As you read about what you are permitted to buy with an FHA mortgage, remember that not all lenders offer all types of FHA home loans. You may find some lenders who do not issue FHA loans on mobile homes, others who may have higher FICO and other credit qualifying standards for the homes they do offer mortgage loans for, etc. Always compare lenders and shop around for the best deal. “Existing Construction” Homes An existing construction home is, as the name implies, one that has already been built. Existing | more...

April 16, 2015

FHA Loans and the Back To Work Program: A Reader Question

By Joe Wallace

A reader asks, “I filed Chapter 7 due to an increase in family size, from 4 to 9. My pay was gone before it hit the bank to pay bills & buy extra food. At the time I filed my credit score was a 680, no late payments. I now want/need to buy a home for me to live in I have a full time job. I kept one creditor & just purchased a new car to get to work. No late payments, will that qualify for the back to work program? I’m not looking to purchase anything out of my comfort zone.” The FHA Back to Work Program is something that may or may not be offered by participating FHA lenders; borrowers need to shop around for a lender | more...

April 15, 2015

Revised FHA Loan Housing Counseling Rules Now In Effect

By Joe Wallace

In our last post, we discussed the HUD press release announcing funding for housing counseling services across the country. Earlier this month, new FHA loan rules took effect which affect a lender’s responsibility to inform borrowers of housing counseling services. The services affected by the new FHA loan rules are intended for those who are at risk of foreclosure on FHA mortgages. According to FHA Mortgagee Letter 2015-04, lenders are required to: “…provide delinquent borrowers with a notice describing the availability of housing counseling offered by HUD-approved housing counseling agencies and by the mortgagee. Mortgagees are currently required to prepare such a notice that provides the information required by FHA.” The lender is required to Mortgagees give affected borrowers all the information included in an FHA/HUD publication titled, “Notification to | more...

April 15, 2015

HUD Announces $36 Million In Housing Counseling Grants

By Joe Wallace

Frequently we write about the availability of housing counseling for borrowers who want it. We’ve urged people to get this pre-purchase counseling by calling the FHA at their toll-free hotline (1-800 CALL FHA) to request a referral to a local HUD/FHA approved housing counselor or agency. The FHA/HUD official site has announced $36 million in housing counseling grants in a press release, a move designed to help homeowners make informed choices when house hunting and applying for the loan. It’s also meant to help borrowers anticipate problems that could lead to mortgage loan default or foreclosure. According to HUDNo. 15-041: “The U.S. Department of Housing and Urban Development (HUD) today awarded more than $36 million in grants to hundreds of national, regional and local organizations to help families and individuals | more...

April 14, 2015

FHA Home Loans, Mortgage Debt Cancellation, And Tax Time

By Joe Wallace

April 15th, the tax deadline, is very near, but many people choose to apply to get an extension so they can file their taxes later in the year. If you haven’t completed your taxes for 2014 and are considering an extension, there is some very helpful information about home loans, home loan debt and related issues that may affect those who have FHA home loans or refinance loans. One important issue many borrowers have had to face in recent years is the tax consequences from a home loan modification or similar alteration to a mortgage where part of the debt is forgiven, cancelled, or written off by the lender. What follows is not tax advice, we are simply quoting what’s printed on the IRS official site. If you have tax | more...

April 14, 2015

FHA Loan Rules For Commission Income: Another Reader Question

By Joe Wallace

A reader asks, “What if a person went from a commission based job as a loan officer to a salary plus commission job as a Mortgage Loan Manager? Would the salary still be averaged over 2 years?” This question is in reference to an earlier post we did back in 2013, which was titled, “FHA Loans and Commission Income: A Reader Question”. In that blog post, we answered a reader who asked us, “Is it true that if you work in a job where your pay is based on commission you have to be with your current employer for at least one year to obtain a FHA loan, even if your prior job was in the same line of work and was also a commission paying job?” The answer we | more...