Articles Published in: July 2015

July 8, 2015

FHA Loans and Foreclosure Avoidance

FHA loan applicants don’t find a home, apply for the loan, and close the deal expecting to miss mortgage payments or get behind on their home loans. But the borrower who understands that it’s a possibility some time down the road and prepares for that contingency has a much better chance of making the best of the situation. Sometimes a little knowledge in advance of such problems can go a long way toward fixing them and making the entire experience easier to manage. Do you know what to do in case you fall behind on an FHA home loan? The FHA, HUD and the Consumer Financial Protection Bureau all have resources you should know about well in advance of any problems–knowing they are there will make the job of getting | more...

July 7, 2015

FHA Loans, FICO Scores and Disputed Credit Reports

By Joe Wallace

A reader question came in recently about FICO scores, medical bills and credit reports; can a borrower’s application be affected by FICO scores that have been lowered due to disputed medical bills and missed payments that may have resulted as part of the dispute? Should a borrower expect difficulty with an FHA loan application if his or her spouse is in such a situation? The answer may depend on a variety of issues and there are several questions that would need to be answered. Are the spouses applying for the FHA loan together? Do they live in a community property state where state law may dictate how credit issues of both spouses are handled in a legal marriage? That is a very important question–not all states have community property laws | more...

July 7, 2015

Mortgage Loan Interest Rate Trends: Decisively Lower

By Joe Wallace

We’ve been watching as mortgage loan interest rates overall have moved higher this summer; the upward trend brought 30-year fixed rate conventional mortgage loan rates back into the low four percent zone, best execution. The FHA mortgage loan interest rates followed suit, but only very late in the trend–we recently watched as FHA mortgage loan rates broke out of the previously long-held 3.75% comfort zone and into a range of best execution rates with 3.75% at the low end and 4.0% at the high end. Greek economic headlines have been responsible for at least some of the volatility in recent weeks, and in light of Sunday’s referendum voting No in regard to a set of changes proposed by its creditors in the Eurozone, the fact that Monday’s rate behavior took | more...

July 6, 2015

FHA Loan Interest Rates: The Rules For Lock-Ins

By Joe Wallace

Since we got a recent reader question about the rules and regulations about FHA loan interest rate locks, it seemed like a good time to review the FHA mortgage loan rules that govern them. At the time of this writing, the FHA and HUD are getting ready to transition to a new volume of rules covering FHA Single Family mortgage loan transactions, HUD 4001.1. Until the effective date in September 2015, the previously used references are valid. In general many of the single family loan rules may be the same, but there have been plenty of changes and updates to certain policies. The information below is still valid at the time of this writing. FHA loan rules state, “Under all currently active FHA single family mortgage insurance programs, the borrower | more...

July 6, 2015

FHA Loans, Interest Rate Locks, and Lender Standards

By Joe Wallace

We recently got a reader question about FHA loan interest rate locks–the borrower signed a contract for an FHA loan at a certain interest rate, then was told later that the rate would be higher because the paperwork was signed after a certain point in the day when the interest rate lock had to be submitted in order to guarantee the rate. Does the borrower have any recourse? This is a tricky question to answer because at first glance, if two parties have signed a legally binding agreement, it stands to follow that one party cannot simply go back and change the terms of that agreement. To say that the borrower would not be eligible for the rate agreed upon in writing by both parties in the legally binding document | more...

July 3, 2015

FHA Home Loans: Pre-Purchase Counseling, HECM Loan Counseling

By Joe Wallace

We often write posts that encourage borrowers to examine their pre-purchase counseling options before starting on the journey to apply for an FHA mortgage loan. We also write posts for eligible Home Equity Conversion Mortgage (HECM) loan applicants discussing HECM loan counseling. Some borrowers might wonder what the difference is between the two. There are some obvious differences. HECM loans are a type of refinancing loan for eligible borrowers aged 62 and older that requires no monthly payments and comes due when the borrower dies or sells the home. FHA single family home “purchase loans” are for borrowers looking to buy a home with an FHA guaranteed mortgage. So up front, many of the concerns a borrower has with a new purchase loan differ greatly than those for any refinance | more...

When Is An FHA Loan Better Than A Conventional Loan?

July 3, 2015

FHA Loans And Borrower Debt

By Joe Wallace

Borrowers new to the FHA loan process have lots of questions. One we received recently involves debt-to-income ratios. A reader wanted to know if his credit report, having been newly cleared of a judgment, needed to also be free of other minor debt. The simple answer is that, no, the FHA loan program does not require a borrower to be completely free from debt in order to apply for a new home loan or refinance loan. But a borrower’s debt to income ratio will be examined to make sure the borrower can afford the loan. That ratio is very important and is one of the reasons why financial planners and home loan experts recommend examining your finances carefully at least a year before committing to a new home loan. Reducing | more...

July 2, 2015

FHA Mortgage Rate Trends: Lower, Then Higher

By Joe Wallace

Monday and Tuesday of this week we saw mortgage rates trying to recover after being pushed into new, higher territory. Both conventional and FHA mortgage loan interest rates took a turn for the worse late last week with 30-year fixed rate conventional mortgages moving higher into the four percent range. At the time of this writing those fixed rate conventional mortgage loan interest rates were reported at 4.125% best execution. FHA mortgage loan rates also moved higher–the previously reported comfort zone of 3.75% has been replaced with a range of best-execution rates with 3.75% at the low end and 4.0% at the upper end of that best execution range. That marks the first time FHA mortgage loan rates have pushed into the four percent zone in quite some time (best | more...

July 2, 2015

Mortgage Loan Closing: How Difficult Is It?

By Joe Wallace

Every home loan is different. When you apply for an FHA mortgage, you may experience a variety of circumstances along the way that can affect how simple or difficult it is to get to your closing date. Borrowers who prepare ahead of time, who get pre-purchase counseling, and learn from the mistakes of their fellow house-hunters can make the entire process simpler and easier to deal with. That’s one reason why the FHA has a list of resources on its official site (www.fha.gov) aimed at advising new borrowers, but the FHA and HUD are not the only government agencies that offer such assistance. The Consumer Financial Protection Bureau (CFPB) also has a wealth of resources aimed at helping consumers in general, but they also have a special section for house | more...

July 2, 2015

FHA Appraisals: Vapor Barrier Issues

By Joe Wallace

A recent reader question that arrived in our comments section involves an FHA appraisal that required a vapor barrier on all exposed dirt. The reader complained that the FHA appraiser didn’t explain how to correct the issue and asked us to define how it can be done. One objection to the FHA appraisal in this case was that the reader was under the impression that the FHA had removed the vapor barrier requirement from its list of minimum property requirements. While we aren’t experts on vapor barriers or how they are to be carried out, we can address the issue of being required to carry out a correction or repair that is not specifically required by FHA minimum property standards. It’s very important to know that FHA minimums are not | more...