Articles Published in: May 2015

May 13, 2015

FHA Loan Rules, Reverse Mortgages and Seasoning Periods

A reader asks, “I had a foreclosure in 9/12/2012. I have applied for a reverse mortgage several months ago. The loan officer told me that I would have to wail until sept 2015 to re-apply. Is there any way I can overcome this dead line.” There are some vagaries with this reader question that require addressing, but we’ll answer the basic query first. FHA loan rules state that exceptions are possible to the minimum “seasoning period” or mandatory waiting time to apply for an FHA loan, but this requires the borrower to meet certain criteria. It would also require the willingness of the lender, which in the case of this particular reader question, does not sound possible with that particular financial institution based on what was shared above. In order | more...

May 12, 2015

FHA Loan Amounts: A Reader Question

By Joe Wallace

A reader asks, “I have a few General but direct questions about FHA loans or ability to borrow & income status . In my case I have about an income range of 88k- 100k…My Fico Score is presently from 586-597; due to go up to 620 very shortly. My debt to income ratio is in the 25% range or so…Based on that information alone, how much max Loan I could get from FHA loan putting at least 3.5% down 0r 10% down on a house worth 395k or/and 270k.” FHA loan rules do permit lenders to approve a home loan for borrowers with FICO scores in the range mentioned in the reader question, but lender standards also apply. A potential FHA loan applicant should know many lenders are looking for | more...

May 12, 2015

FHA Cash Out Refinancing Loans For Paid-Off Mortgages: A Reader Question

By Joe Wallace

A reader asks, “I have a house paid for and I am looking for a F H A loan for $10 thousand or $15 thousand . According to bankers because I have not bought anything in the past 10 years I have no credit. is it possible to get a loan somewhere?” FHA loan rules printed in HUD 4155.1 Chapter 3 Section B states that it is possible for an FHA cash out refinance loan on a home that has been paid in full. Specifically, the Chapter says: “Cash out refinance transactions are only permitted on owner-occupied principal residences. Properties owned free and clear may be refinanced as cash out transactions”. However, FHA loan standards aren’t the only ones at work in cases like these–the lender’s standards also apply. If | more...

May 11, 2015

FHA Loan Appraisals: Sewer/Septic

By Joe Wallace

A reader asks, “We closed on house on 3/31. Had inspection. Stated was sewer, prev owner said was sewer, realtor said was sewer. On 5/8 found waste backed up in toilet in basement, called plumber, found out we have a septic system, currently waiting on them to come out inspect and pump.” “We have a FHA loan. How was this missed? we have no problem paying to have it pumped, but who is responsible if it more then pumping out issue? The company we called (only one in area) stated he had just pumped it 2 years ago. So prev owners knew it was on septic.” There is one important question which must be answered–did the reader assume the FHA appraisal could substitute for a home inspection, or did the | more...

May 11, 2015

FHA Loan FICO Score Standards For Mobile Home Loans: A Reader Question

By Joe Wallace

A reader asks, “Can you advise if I can obtain a loan with a credit score of 564. I want to purchase a mobile home” This is such a common question–many borrowers want to know if their FICO score is good enough to qualify for an FHA home loan. The answer is that it all depends on the lender. FHA FICO score minimums, as published in the FHA loan rules in HUD 4155.1, technically allow a borrower with a FICO score above 500 to apply for an FHA loan. Borrowers with FICO scores below 580 but above 500 do not qualify for maximum FHA financing–these applicants would be required to apply for a loan with a higher down payment than those applying for a loan with FICO scores above 580. | more...

May 9, 2015

FHA Loans, Your Credit Report and the Debt-To-Income Ratio

By Joe Wallace

A reader asks, “My question is about what debt matters and witch debt doesnt.I have 4 debts that have been removed from my credit report according to credit karma and 1 credit card that is closed but I owe 1100 dollars on.” Any current debt (outside of student loans under qualifying deferment plans and qualifying medical debt which may be viewed by the lender in a different way depending on circumstances) may affect a borrower’s debt to income ratio calculation for an FHA loan. Anything that has dropped off your credit report won’t be an issue–if it isn’t on your credit record chances are it’s not a factor in the loan approval process unless there’s some record of missed or late payments associated with the accounts that does exist. When | more...

May 8, 2015

FHA Mortgage Rate Trends: Moving Higher

By Joe Wallace

Since our last report, mortgage loan rates have moved higher and faster than they have for much of 2015. Four days in a row of upward pressure on mortgage loan rates saw 30-year fixed rate conventional loans re-entering 4.0% (best execution) territory, though with some improvements happening on Thursday some extremely qualified borrowers may have access to sub-4% rates depending on the lender and the applicant’s financial qualifications. FHA mortgage loan rates have climbed out of a previously reported range (best execution) between 3.375% and 3.5% and into a new, higher best execution rate of 3.75%. Remember, best execution rates are available in situations where a borrower has extremely good financial qualifications. The availability of a participating lender can also be a factor–your experience may vary depending on FICO scores, | more...

Can I buy a manufactured home with an FHA loan?

May 8, 2015

FHA Loans With Co-Signers: A Reader Question

By Joe Wallace

A reader asks, “when can a co-signer be released from the mortgage note when the borrower can show capacity to pay, can the co-signer get out within 6 mo or 12 months showing borrower has the income to pay mortgage?” The problem with answering questions like this is fairly simple–we don’t know the language of the purchase contract. Much depends on what is contained in the purchase agreement and depending on whether or not the reader has already signed legally binding paperwork in connection with the FHA mortgage loan–that makes a big difference in the answer to the question. For example, could a borrower and co-signer who have not legally committed to the sale negotiate with the lender to have such “ability to pay” language included in the mortgage loan | more...

May 8, 2015

FHA Refinance Loans And FHA Case Numbers: A Reader Question

By Joe Wallace

A reader asks, “I bought my home in 2009. Its a FHA mortgage. I do not qualify to refinance because paperwork and case number were assigned after may 1 2009. I need to know what I can do to refinance with a FHA mortgage I need to Lower my payments, smaller interest rate shorten time on contract I feel like im stuck. There has to be a way to get this done.” It’s not clear why this reader believes an FHA home loan isn’t eligible to be refinanced because of the date of the case number–qualified borrowers are free to apply for FHA refinancing for their home loans regardless of the date of the case number, provided a minimum of six months and six mortgage payments have been made. That’s | more...

May 7, 2015

FHA Loans And The Credit Review

By Joe Wallace

We get many questions about FHA loan applications–questions that involve credit, FICO scores, FHA loan standards, and more. Many borrowers aren’t sure about whether they have FICO scores high enough to qualify for an FHA mortgage, and others may wonder if having a history of late or missed payments could hurt their chances at an FHA home loan. In general, borrowers are encouraged to wait to apply for an FHA mortgage until they have 12 full months of on-time payments on all financial obligations. This brings a potential home loan borrower closer to FHA loan approval; anything less can put your loan application in danger. Why? It’s good to know the FHA stance on these issues, and the FHA loan rulebook does spell out the reason why such a premium | more...