Articles Published in: July 2015

July 25, 2015

FHA Mortgage Loan Interest Rate Trends: Creeping Toward Month-Long Lows

Mortgage loan rates aren’t quite flat, but the amount of improvement we’ve seen over the last week has been very small. With that in mind, it’s a good thing that the trend has been lower. We haven’t seen rates move from their best execution comfort zones across the board, though our sources report that certain lenders may offer something slightly lower than the best execution rates we’ve been reporting here. Some are offering 30-year fixed rate conventional mortgage loans closer to the high three percent zone they were in much earlier this year than the 4.0% to 4.125% best execution range we’ve seen all week. FHA mortgage loan rates have not moved out of the range we reported previously. Best execution rates for FHA mortgages at the moment are between | more...

Can I buy a manufactured home with an FHA loan?

July 24, 2015

FHA Loan Questions: Late Payment History

By Joe Wallace

A recent reader question about FHA loans and missed payments reminds us how important it is to examine your credit report and repayment history on all financial obligations long before you apply for a new home loan. The reader wanted to know if late payments on a student loan would affect chances for FHA home loan approval. The question mentioned that the reader’s current mortgage loan is current, but that late payments on the student loan were on her credit record. Does this reader have a chance for a new FHA loan? The answer is complicated because of two things. A borrower with a current mortgage trying to apply for a new purchase FHA home loan would have to declare that the new home is to be the borrower’s primary | more...

July 23, 2015

FHA Loan Down Payments: How Your Lender Verifies Cash Saved At Home

By Joe Wallace

In our previous blog post we discussed some of the rules for down payment funds on an FHA home loan. Did you know the FHA requires its participating lenders to verify the sources of all down payment money? This is to prevent funds coming from unacceptable sources such as credit card cash advances or payday loans. Borrowers are permitted to bring in a down payment with money saved at home, but the FHA loan rulebook has specific instructions to the lender about how this type of down payment money is to be verified and handled. Chapter Five of HUD 4155.1 tells the lender that money saved at home should be verified with help from the borrower who must provide specific information about the funds. “To verify cash saved at home, | more...

July 23, 2015

FHA Loan Down Payment Rules: Acceptable Sources of Down Payment Funds

By Joe Wallace

A recent reader question in our comments section involved the source of down payment funds. The reader wanted to know if cash saved at home could be used to make an FHA loan down payment. The answer is simple, yet can get more complicated depending on circumstances. The FHA loan rules state that down payment funds must be verified. The reason for this includes requiring the lender to insure that down payment money does not come from payday loans, credit card cash advances or any other type of “non-collateralized” loan. FHA loan rules have a list of acceptable sources, which include (but are not limited to) proceeds from the sale of investments, property, bonds, etc. Cash saved at home is acceptable, as are trade equity, rent credit, even gift funds–provided | more...

July 22, 2015

FHA Mortgage Loan Interest Rate Trends

By Joe Wallace

This week has been an interesting one for mortgage loan interest rates. In fact, for the last seven business days, rates have varied between flat to slightly improved. The best execution rates for 30-year fixed rate conventional mortgages have moved from 4.25% at the upper end of a range of best execution rates to between 4.0 and 4.125% depending on the lender. Tuesday saw mortgage loan rates fall to fourteen day lows–the rates have been improving in very small increments, but any change for the better is definitely welcome. FHA mortgage loan rates are still within the previously reported comfort zone between 3.75% and 4.0% best execution. It may take several days of sustained improvement at the current rate of change, or a day or two of more dramatic adjustments | more...

When Is An FHA Loan Better Than A Conventional Loan?

July 22, 2015

FHA Streamline Refinance Loans

By Joe Wallace

If you have an existing FHA mortgage loan, you can apply for a refinance loan with no FHA required credit check or appraisal that results in a reduction in your monthly mortgage payment and/or interest rate in most cases. Called the FHA Streamline Refinance loan, these loans are only for existing FHA mortgages and offer no cash back to the borrower. FHA loan rules permit Streamline loans for those who have assumed FHA mortgages. According to the FHA official site (www.fha.gov), the FHA, “does not require an appraisal on a streamline refinance. These transactions can be made with or without an appraisal.” If there is a lender required appraisal, there may be corrections noted. According to FHA loan rules, these corrections may or may not need to be made as | more...

July 22, 2015

FHA Loans and Co-Borrowers

By Joe Wallace

We often get reader questions about co-borrowing, FICO scores and other factors. One recent question asked of us involves a couple who have a single income, student loan debt, and some FICO score issues. The reader wanted to know if being a co-borrower with a higher FICO score could help with loan approval in spite of the co-borrower having no income and student loans. The FHA loan rules found at the FHA official site (www.fha.gov) state the following about co-borrower income: “The lender must analyze the income of each borrower who will be obligated for the mortgage debt to determine whether the borrowers income level can be reasonably expected to continue through at least the first three years of the mortgage loan.” That alone implies that all borrowers to be | more...

July 21, 2015

Self-Employed, Contractor, Or Employee? It Matters When You Apply For An FHA Loan

By Joe Wallace

A recent article posted at CNN Money raises some interesting FHA loan questions regarding the difference between workers who act as independent contractors and those who work as employees. FHA loan rules require more job and income related information from FHA loan applicants who are self-employed or who work as part of a family business. These borrowers may need additional tax data and may need to submit profit and loss statements and related details that can help a lender verify the applicant’s income and employment. According to the CNN Money article titled, “When an independent contractor is really an employee”, there’s a large number of recent lawsuits that, “allege companies should not be classifying workers as free agents. For example, last month a California commission ruled that an Uber driver | more...

July 21, 2015

FHA Mortgage Loan Myths

By Joe Wallace

From time to time we get asked questions about FHA loans that reflect common misconceptions and myths about the program. Borrowers sometimes assume things about FHA single family home loans that aren’t true and it’s always a good idea to post some basic facts about the program from time to time to remind people what’s true and untrue about FHA mortgages. FHA loans, for example, aren’t limited to people on fixed incomes, or to those who must demonstrate a need for a non-conventional loan. FHA mortgages are open to all qualified applicants. Your FICO scores, job history, debt-to-income ratio and other financial qualifications are what determine your ability to get an FHA loan. There is no such thing as earning “too much income” for an FHA loan. There’s also no | more...

July 20, 2015

FHA Loan Employment History Rules

By Joe Wallace

One common topic many borrowers have questions about when they want to apply for FHA loans involves employment history. How long do you have to be on the job with your current employer before you can qualify for an FHA mortgage loan? Believe it or not, FHA loan rules state that there is no minimum length of time you have to be with your current employers in order to be considered for a loan. According to HUD 4155.1 Chapter Four: “To be eligible for a mortgage, FHA does not require a minimum length of time that a borrower must have held a position of employment. However, the lender must verify the borrowers employment for the most recent two full years, and the borrower must –explain any gaps in employment that | more...