Articles Published in: June 2015

June 30, 2015

FHA Home Loans and the Appraisal Process

The appraisal portion of the FHA home loan process is often misunderstood. What exactly IS an FHA appraisal and what is it designed to do? The answers are very important, especially for first-time home buyers. The FHA appraisal process is designed to do two basic things–one is to establish the fair market value of the home you want to purchase with an FHA loan. This is accomplished when an FHA appraiser–who is NOT considered a home INSPECTOR–reviews the home to make sure it meets minimum standards for safety and habitability. The review of the home is also designed so that the appraiser can compare the property to others like it on the market. The appraiser does the review, writes an appraisal report, and submits it to the lender. At no | more...

June 30, 2015

Planning For An FHA Home Loan? Pull Your Credit Reports For Free

By Joe Wallace

If you are in the planning stages before purchasing a new home with an FHA mortgage loan, it’s a very good idea–strongly recommended, in fact–to pull your credit reports from the three major credit reporting agencies. It’s best to request copies of your credit reports as early as possible in the process so that you have abundant time to dispute any outdated information, investigate evidence of identity theft, etc. Many people in this stage go to the official sites for the three major agencies–Equifax, Experian, and TransUnion. But did you know that federal law permits borrowers to get a free credit report from these three agencies once every 12 months? According to the Federal Trade Commission official site (https://www.ftc.gov/), anyone who wants the free reports can order them from annualcreditreport.com, | more...

June 29, 2015

FHA Loans: An Overview of the Process

By Joe Wallace

One of the most common questions about FHA loans involves the basic processes of the loan. What ARE the steps towards getting an FHA mortgage? Assuming that we’re discussing what happens once you have found a suitable home, as opposed to the planning stages for a loan (budgeting, researching, etc) the FHA loan rules in HUD 4155.2 actually have a list of steps that happen at each stage of the loan application process. These steps are found in Chapter One, Section A of HUD 4155.2. The process begins with the borrower getting in touch with the participating FHA lender and the lender determining if the borrower’s loan needs are eligible for FHA mortgage loan insurance. Step Two is described as, “The borrower, along with the lenders representative, completes the loan | more...

June 29, 2015

FHA & HUD On The Recent Supreme Court Fair Housing Decision

By Joe Wallace

There has rightfully been a great deal of attention on last Friday’s ruling by the Supreme Court on marriage equality. But last week’s Supreme Court actions also included other important decisions, one of which affects those seeking a place to live and the right to do so under the Fair Housing Act. On Thursday, June 25 2015, the FHA and HUD official site was updated to include a press statement from HUD about the court’s decision in a Texas housing discrimination case: “Today, the U.S. Supreme Court reaffirmed an important legal principle in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc. The Justices found that the Fair Housing Act not only prohibits intentional acts of discrimination, but also housing practices that have an unjustified discriminatory | more...

June 27, 2015

FHA Loans Post-Bankruptcy? When To Apply?

By Joe Wallace

Borrowers who have filed for bankruptcy, or who have had other financial difficulties resulting in negative credit, may have questions about the timing of their next home loan application. We get many reader questions about this–some ask “When can I apply for a new loan?” or, “How long should I wait until I apply?” Others want to know if their credit scores are good enough, writing that they have scores within a certain range and whether those scores are enough to qualify. Bankruptcy, foreclosure, and other negative-credit actions may require specific waiting periods before you can apply again. Some of these are dependent on circumstances, lender standards and other factors–there often is no one set answer for borrowers who meet certain parameters. If you have these types of questions, one | more...

June 26, 2015

FHA Loan Occupancy Rules

By Bruce Reichstein

Some borrowers get in touch with us with questions about FHA loan occupancy rules. One of the most common questions about FHA loan occupancy requirements involves those who must travel for business, or who find themselves having to relocate to another state because of job issues. Are borrowers who spend less time at home than a typical home owner considered in violation of FHA mortgage loan occupancy rules? For example, the homeowner who now works and lives in another state but commutes home for the weekend? FHA loan rules require a borrower to take ownership of the home at closing time and use the home as the primary residence for at least one year after the closing date. The borrower can’t vacate the home and rent it out during this | more...

June 26, 2015

FHA Streamline Refinance Loans: Appraisal Required?

By Joe Wallace

When you examine your streamline refinance options, it’s easy to get confused over the difference between lender requirements and FHA refinance loan standards. FHA Streamline Refinance Loans are intended for borrowers with existing FHA mortgages and can be done on any type of existing FHA loan–fixed rate, adjustable rate, graduated payment mortgage, etc. Some borrowers want to know if there is a new credit check or appraisal required. There is no short answer to this because while FHA loan rules do not demand a new appraisal, the lender may require one. The credit check issue also depends on a variety of circumstances including the type of refinance transaction (fixed rate to adjustable rate, for example) and how long the borrower has owned the property. FHA loan rule spell out some | more...

June 25, 2015

FHA Mortgage Rate Trends: Sideways

By Joe Wallace

After small-but-steady improvement recently, rates opened the week with a jump higher that wiped out the previous improvements, and by Wednesday mortgage loan rates have been wavering back and forth, more or less holding the same position when all is said and done. 30-year fixed rate conventional mortgages are up for 4.125% best execution, and we’re still seeing FHA mortgage loan rates holding a best execution comfort zone of 3.75%. As we always point out, best execution rates are offered to those applicants with the most ideal financial qualifications. Your own experience will depend greatly on FICO scores, your credit history and other factors. FHA mortgage loan rates can vary more among participating lenders than their 30-year fixed rate conventional counterparts. FHA rates have been in the 3.75% best execution | more...

June 25, 2015

FHA Home Loan Rules and Lender Requirements

By Joe Wallace

We get lots of questions about the specifics of FHA home loans. Some of those questions involve areas that may not be covered specifically by FHA loan rules. Among the questions we got recently, there were some about the loan rules that cover a borrower’s employment status. “I got laid off from my contractor job and rehired elsewhere. The lender is asking for another paystub from the current employer in order to move forward with the loan. Is this true?” FHA loan rules may or may not have a say in such cases, but when the lender informs the borrower that X, Y, or Z might be required in order to move forward with the loan, your loan officer may be referring to the lender’s standards and not necessarily FHA | more...

What happens to my FHA loan in a natural disaster?

June 25, 2015

FHA Loan Debt To Income Ratios

By Joe Wallace

Are you concerned about your debt to income ratio going into the FHA loan application process? Do you wonder how your chosen FHA lender will view your existing debts and whether debts that are scheduled to be paid off at some point in the near future might affect your FHA loan application? It helps to know what the FHA loan rulebook says about a borrower’s overall credit worthiness. At the time of this writing, the FHA and HUD are preparing to transition to a new FHA loan rulebook, but the previous references still apply until then. On the FHA official site you will find HUD 4155.1, which includes a section in Chapter Four about how the lender is to analyze the borrower’s credit. That section says in part: “When analyzing | more...