Articles Published in: July 2015

July 31, 2015

FHA Loan Assumptions

There are people on both sides of a potential loan assumption transaction–home owner and house hunter–who want to know if FHA home loans are assumable. Is it possible for a person who has purchased a home with an FHA mortgage loan to sign that loan over to someone else and allow them to assume responsibility for the loan and take ownership of the home? FHA loan rules say that loan assumptions are permitted for FHA single family home loans. Depending on when the loan was issued, there may be different requirements. For example, “If the loan application was signed by the borrower before December 1, 1986, the FHA-insured mortgage generally contains no restrictions on assumability.” That information is found in HUD 4155.2 Chapter Three and basically allows the loan assumption | more...

July 31, 2015

FHA Loans and “Pre-Payment”

By Joe Wallace

One of the important selling points of an FHA mortgage loan is the basic differences FHA mortgages have from conventional loans; the lower down payment, more forgiving credit requirements, and a rule that a borrower is able to freely dispose of the property in any way he or she sees fit once the deal is closed and the borrower has taken up residence in the home. But there’s another important difference between some conventional mortgages and FHA loans. Did you know that under the FHA loan program you cannot be penalized or charged for early payoff of the loan? HUD 4155.2 Chapter Three has a section that governs what the FHA terms, “pre-payment”. It says that a borrower may pre-pay an FHA mortgage “in whole or in part”. It also | more...

July 30, 2015

FHA Loans, Escrow Accounts, And Real Estate Taxes

By Joe Wallace

There are many FHA loan questions regarding the use of escrow accounts, especially when it comes to new purchase loans. Applicants sometimes get confused when the lender requires an escrow account. Since FHA loan rules do not require the use of escrow, some borrowers may wrongfully believe they don’t have to use them, period. But your lender may require the use of escrow and this is fully permitted under the FHA loan program. In fact, FHA loan rules anticipate some lenders requiring escrow for a variety of loan transactions; one use of escrow is to collect and pay property taxes. According to the FHA/HUD official site, “It is the lender’s decision whether the borrower must maintain an escrow account for the purpose of paying taxes and other items. The HUD | more...

July 30, 2015

FHA Loan Settlement Dates, Per Diem Interest At Closing

By Joe Wallace

The rules for FHA home loans regarding closing dates and related details are found in HUD 415.2 (at the time of this writing) in Chapter Six under the heading, General Loan Closing Requirements. There are a few items in this section that should be noted in case FHA borrowers have questions–including the basic definition of a closing date as described in the rulebook: “The date of closing/settlement is generally considered the date on which the note and mortgage are signed by the borrower. This is also the date defined as the settlement date on the HUD-1 Settlement Statement. However, the 60-day endorsement submission clock begins on the date that the lender relinquishes control of the loan proceeds (disburses the mortgage funds), for both purchase money mortgages and refinance transactions.” FHA | more...

July 29, 2015

FHA Mortgage Loan Interest Rate Trends

By Joe Wallace

For about ten business days now we’ve watched mortgage loan interest rates either hold steady or make small improvements. The gains aren’t dramatic enough from day to day to force much change in the best execution numbers we report here; instead borrowers likely notice the difference in closing costs. But whatever the case, ten days of rates that aren’t getting any higher is a good thing after the sustained upward trend we’ve witnessed this summer. Yesterday (Tuesday July 28) we saw the first day of slightly higher rates since that holding-to-slightly-improved trend began. The move higher certainly wasn’t enough to push rates out of their current comfort zones, so we have 30-year fixed rate conventional mortgage loans holding steady (best execution) at the 4.0% to 4.125% range we’ve been discussing | more...

July 29, 2015

FHA Loans And Your Credit

By Joe Wallace

A reader got in touch with us this week to ask if it is possible to get an FHA mortgage loan even if the borrower doesn’t have “perfect credit”. While it’s not clear what the reader means by that phrase, we can answer the question in a general way. The simple answer is yes, borrowers can apply for and get approved for FHA home loans with less than perfect credit, but much depends on the nature of the credit issues on your report and whether there’s an overall pattern of responsible credit use the lender can use to justify approving your home loan. FHA loan rules are clear that individual mistakes in a borrower’s past should not be the sole determining factor when it comes to approving or denying an | more...

July 29, 2015

FHA Refinance Loan Options

By Joe Wallace

Looking for a refinance loan? Do you know what your options are as a homeowner when it comes to refinancing from a non-FHA loan to an FHA mortgage? Or are you in need of an FHA-to-FHA refinance? There are many options available, some of which may surprise you. Did you know there is one type of FHA refinancing which has no FHA-required credit check? Borrowers who are currently paying on adjustable rate mortgages should take a close look at FHA refinance loan options for a variety of reasons. Those who have non-FHA loans can refinance into fixed rate FHA loans, or refinance into another adjustable rate mortgage (ARM)–FHA loan rules permit both options for qualified borrowers. Non-FHA borrowers looking to refinance into an FHA mortgage will be required to get | more...

July 28, 2015

FHA and HUD Recognize A Year Of Opportunity

By Joe Wallace

The FHA and HUD are reminding borrowers about an important change made to the FHA single family home loan program in conjunction with a new HUD press release titled, “A Year of Progress: Delivering on the Promise of Opportunity”. The Department of Housing and Urban Development is approaching its fifth decade of service. The press release states, “As HUD approaches its 50th anniversary, Secretary Castro is laser focused on advancing policies that provide folks with access to quality housing, good schools, transportation and economic opportunity. We recognize housing as a platform for Americans who are striving to improve their lives and break the cycle of poverty for the next generation. As needs for our services have increased, HUD will continue to invest in initiatives that have demonstrated outcomes in helping | more...

July 28, 2015

FHA Loans, Foundation Trouble, And Home Inspections

By Joe Wallace

A reader got in touch with us to ask about a situation where a home with foundation problems was purchased with an FHA loan. The reader says a home inspector was not hired because the foundation issue was “supposed to be taken care of” prior to the borrower moving in. Later, the borrower discovered that no corrections to the foundation had been made and further problems were discovered. The main question was whether or not the borrower has any legal recourse in situations like these. FHA loan rules and the FHA/HUD official site are very specific when it comes to borrowers who rely on FHA appraisals and their outcomes instead of hiring a home inspector to take a more in-depth look at the property. The FHA appraisal is not a | more...

July 27, 2015

FHA Loan Closing Costs and Down Payment

By Joe Wallace

A recent reader question in our comments section asked about whether closing costs are including in the FHA minimum 3.5% down payment. Is it true that an FHA loan down payment amount may include closing costs? To fully understand this issue, it’s good to know what can be included in closing costs for your FHA home loan. Closing costs include (but are not limited to) the following: Lender’s origination fee Deposit verification fees Attorney’s fees Appraisal fees and compliance inspection fees The participating lender’s origination fee Any title insurance or title examination Property surveys Credit report fees Certification fees Note that these fees do not have anything to do with the sales price or appraised value of the home. FHA loan rules say that the loan amount for an FHA | more...