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Articles Published in: May 2015

FHA Loan Credit Score

FHA Mortgage Loans and the Fair Credit Reporting Act (FCRA)

Most FHA loan applicants are well aware when they apply for a new home loan that they are about to give permission to the lender to do an extensive review of FICO scores, loan repayment history, financial responsibility in general, income, and much more. But did you know that there are federal laws that govern how a lender must proceed in order to be fair during the process? These laws also explain in general what to do if negative credit information requires “adverse actions” such as denial of a loan application. The Fair Credit Reporting Act instructs lenders on how to proceed in such cases, and FHA loan rules in HUD 4155.2 Chapter One, Section B include the following: “The Fair Credit Reporting Act (FCRA) is intended to control collection | more...

 

FHA Loans And Interest Rate Trends: The Interest Rate Lock

FHA home loans, like their conventional mortgage counterparts, feature interest rates that must be negotiated between the borrower and the lender. HUD 4155.1 Chapter One verifies this, stating: “Under all currently active FHA single family mortgage insurance programs, the borrower and the lender negotiate the interest rate and any discount points”. In recent days at the time of this writing, FHA and conventional mortgage rates have been in a state of flux, moving higher due to upward pressure from overseas economic developments and other factors. FHA borrowers may wonder how they might be protected from further increases in mortgage loan rates, should they occur, once they have committed to an FHA home loan. That is where something called the interest rate lock comes into play. The lender and borrower can | more...

 

FHA HECM Loans: Basic Details You Should Know

If you are a qualified borrower aged 62 years or older and either own your home or are very close to doing so, you may be eligible for an FHA Home Equity Conversion Mortgage (also known as a HECM loan). HECM loans, also known as reverse mortgages, feature money back to the borrower and no mortgage payments. The HECM loan normally comes due and payable when the borrower dies or sells the home. According to the FHA official site, the type of homes eligible are strictly residential in nature with an occupancy requirement for the borrower: “To be eligible for the FHA HECM, your home must be a single family home or a 2-4 unit home with one unit occupied by the borrower. HUD-approved condominiums and manufactured homes that meet | more...

 
Mortgage Loan Rate Trends

Are You Ready For An FHA Home Loan?

If you are considering an FHA home loan, are you ready to fill out the paperwork? Here are some important questions to ask if you are considering applying in the near future: What’s My Credit Score? If you don’t know your current credit score, chances are good that you are not prepared to begin filling out FHA loan paperwork. Before you commit to applying for a new home loan, it’s strongly recommended that you pull your most recent credit report, check your FICO scores and see what your lender will see when he or she requests the same information. If you don’t know what the lender will see, find out before the bank does. What Does My Payment Record Look Like? Have you missed ANY payments in the 12 months | more...

 

FHA Loan Rules For Re-Selling: A Reader Question

A reader asks, “I purchased a manufactured home 10 months ago. I tried to sell it to a buyer whose lender told her that I as a seller have to won the home for at least a year before a buyer to use FHA for their loan. Is this a fact?” FHA loan rules do place a partial restriction on how the buyer can sell his or her property that has been purchased with an FHA mortgage loan. This restriction, known as the FHA’s “anti-flipping rule” requires borrowers to wait a minimum of 90 days before selling the property. FHA mortgagee letter 2014-06 spells out these rules, which were amended for a time with a waiver to the anti-flipping rule, but since those days are over a review of the | more...

 

FHA Loans Vs. “Low Interest Loans”: A Reader Question

A reader asks, “Would I apply for a FHA loan if I was looking for a Disability low interest loan? I am trying to find out for my nephew. Were confused by the wording and there seems to be very little information out there surrounding this benefit.” “I am told you need as little as $500 down but cannot find out whether some or all of the closing cost can be financed in the loan. Thank you in advance for your response. He just attended the counseling seminar but no one there was able to answer my questions. I was the only one there seeking this type of loan so maybe there is not as much need to know about this type of loan.” The FHA single-family loan program does | more...

 

FHA Loan Reader Questions: Septic Tanks, Condo Loan Rules

We have two questions today that are linked by a common answer. The first question: “Isabela, PR (00662). what is HUD/FHA requirement regarding septic tank covered with grass. the complete back yard, including septic tank is covered. I am undergoing a HARP refinance…” The answer to this question depends on what the state/local code requirements are for septic tanks. FHA loan rules include a requirement that septic systems meet the approval of the local authority. If you contact the FHA directly by calling their toll-free number, you will learn that the FHA does not–and cannot–maintain archives of all state and local building codes across the United States. A borrower who needs information like this should contact the local authority to learn what the rules might be. The second reader question: | more...

 

Co-Borrowers and Foreclosure: A Reader Question

A reader asks, “My father purchased a home approx.13 years ago. He became ill in the beginning of 2013 and died the end of 2013. I was the co borrower of the home. I tried to do everything in my power to keep the home but did not receive any help. The help that was available was only for those who had a spouse. The house foreclosed in Sept 2014. I have been without a place to live since then because of the foreclosure being on my credit report. This is the worse I have ever dealt with.” “I have been employed for nearly 19 years. I work hard everyday and now living with my mother because I couldnt save my fathers home after his death. I live in Nashville,TN. | more...

 
What Is An FHA Loan Limit?

FHA Loans For First-Time Home Buyers

A reader asks, “I have a condo that was FHA approved when I bought it 10 years ago, they decide to not continue to participate any more about 5 years ago, all I was able to do was refinance at a lower rate thru streamlining with no money out. I had filed bankruptcy a little over 2 years before I bought it with a FHA loan at 5.5.” “I got my credit score up and have a rate under 4% now by refinancing it thru streamline which the balance can be assumed by someone if they qualify but would have to find the balance else where, what I want to know is that I want to sell my condo and buy a house possibly thru FHA can I buy it | more...