Articles Published in: December 2015

December 8, 2015

FHA Mortgage Loans and Home Inspections

When you buy a home with an FHA mortgage, there is a process known as a appraisal that must happen prior to loan approval. An FHA appraisal involves a professional who reviews the property to insure it meets FHA minimum standards for safety, economic viability, and livability. Some mistake the FHA appraisal process for a home inspection, but the FHA and HUD are quick to point out that the appraisal is NOT a complete, top-to-bottom review of the home. We get comments and questions about this process in our comments section, and many of them have a familiar theme. Consider this recent reader comment: “…it boggles my mind how I could have bought my home 5 short months ago with an FHA loan and found out that it was infested | more...

December 8, 2015

FHA Home Loans For Existing Properties: Weatherization

By Joe Wallace

Did you know that in certain cases, FHA single-family home loan rules in HUD 4000.1 permit the borrower to add funds to weatherize an existing construction home being purchased with an FHA mortgage? According to HUD 4000.1: “The weatherization product permits the Borrower to finance the cost of eligible energy-related weatherization improvements, in conjunction with a purchase or refinance.” This is separate from an FHA Energy Efficient Mortgage (EEM) though that can also be included in the loan for qualified borrowers. From HUD 4000.1: “Weatherization improvements may be financed in conjunction with the following: –Section 203(b) purchase transaction (or) no cash-out refinance transaction –Section 203(h) Mortgage Insurance for Disaster Victims –Energy Efficient Mortgages (EEM)” The loan rules for this type of FHA mortgage or refinance includes a list of eligible | more...

December 7, 2015

FHA Refinance Loans: A Checklist

By Joe Wallace

Are you thinking about refinancing your home loan? There are many things you will want to consider in the planning stages that can help speed you to the application stage of your new loan. Here are some basics you should consider when saving and planning to refinance: The Type of Refinancing You Need Are you searching for a Streamline Refinance for your existing FHA mortgage loan? Or so you need to refinance from a conventional or other non-FHA mortgage into an FHA home loan? Do you want cash out? Or do you just need lower payments? All these factors are important to consider when choosing the FHA loan product that is right for you. An FHA Streamline has different rules and requirements than an FHA Cash-Out Refinancing loan. Know the | more...

December 7, 2015

Mortgage Rate Trends: Sharply Higher, Then Lower

By Joe Wallace

On Thursday, mortgage loan interest rates took a significant jump higher, pushing 30-year fixed rate conventional mortgages to a best execution range between 4.0% and 4.125%. On Thursday FHA mortgage loan rates remained in their 3.75% best execution comfort zone (though you will see more variation among participating lenders for FHA mortgage loan rates). All eyes were on Friday’s Employment Situation Report as make-or-break factor–was Thursday a portent of things to come? Or was it just a “moment”? Come Friday, rates actually took back some of that lost ground in spite of an employment report that was, according to our sources, stronger than anticipated. The report didn’t have the anticipated effect (strong economic data is often a catalyst for rising mortgage loan rates based on the investor reaction to that | more...

December 4, 2015

FHA Loan FICO Score Requirements: A Reader Question

By Joe Wallace

A reader got in touch with a question in the comments section about FHA loan FICO score requirements, asking, “I have a client that was denied by my lender but has an approval by another. My situation is this.parents are putting $200k down for the purchase. The boys will be qualifying for the $150k balance. Mid FICOS are 600 and 602 and one son has two lates within the last 6 months. My lender said that with a score below 640, they fall into a different category that prohibits any lates in the past 12 months. Can you please clarify?” Lender standards vary from one financial institution to another, so it’s entirely possible what the reader is asking about here is a specific lender’s standard. In general it’s strongly discouraged | more...

December 4, 2015

FHA Adds Additional Temporary Guidelines For Condos

By Joe Wallace

The FHA and HUD eased certain condo guidelines earlier this year, and have since added a second round of temporarily eased “approval provisions” for condo projects to be added to the FHA approved list for single family home loans. According to an FHA mortgagee letter, both rounds of these temporarily eased guidelines are designed to help more people get into FHA condo loans. According to Mortgagee Letter 2015-27, “It is anticipated that the issuance of these additional temporary provisions will increase the pool of condominium projects eligible for FHA approval, thus increasing affordable housing options for first-time and low to moderate income homebuyers. The requirements of this Mortgagee Letter are applicable to all Title II programs including the Home Equity Conversion Mortgage (HECM) insurance program, unless otherwise stated.” One area | more...

December 3, 2015

HUD 4000.1 On Calculating Maximum Mortgage Amounts For Purchase Loans

By Joe Wallace

HUD 4000.1 was published earlier in 2015, and contains new, updated, and restated FHA loan policy on single-family mortgages, refinance loans, HECM loans and more. One important section of the new FHA home loan rules for single family mortgages is the part of HUD 4000.1 that discusses maximum mortgage loan amounts. Do you know what the rules are for calculating the maximum loan amount on a new purchase FHA loan? According to HUD 4000.1, “The maximum mortgage amount that FHA will insure on a specific purchase is calculated by multiplying the appropriate LTV percentage by the Adjusted Value. In order for FHA to insure this maximum mortgage amount, the Borrower must make a Minimum Required Investment (MRI) of at least 3.5 percent of the Adjusted Value.” But there may be | more...

December 3, 2015

Mortgage Loan Trends: Lower, Then Steady Ahead Of Potential Volatility

By Joe Wallace

On Tuesday there was improvement in mortgage loan rates, with some lenders moving back into sub-four percent territory. That’s a welcome development for those who have been floating in hopes of some kind of improvement; Wednesday didn’t bring more of the same, but rates did hold steady or move only a bit higher in some cases. This is a week for a great deal of potential volatility in rates for a variety of reasons connected to scheduled economic data releases, so locking and floating decisions are tricky–the closer we get to Friday, the greater the potential for higher rates. Friday, the Employment Situation Report comes out and that is a very important event depending on both the contents of that report and investor reaction to it. Some industry pros are | more...

December 2, 2015

FHA Refinancing: When Is A Credit Check/Appraisal Required?

By Joe Wallace

Are you considering refinancing your dream home? Are you looking for cash out, lower payments, or a lower interest rate? Your financial needs and goals will dictate the type of FHA refinance loan you should apply for. Knowing which type of loan you need is an important part of the refinance preparation process. Borrowers who have existing conventional, VA, or other non-FHA home loans can refinance into an FHA mortgage loan using an FHA cash-out or non-cash out option. This type of refinancing requires both a new appraisal and a new credit check. To get cash out on such a loan, you’ll need to have enough money left over in the new loan after paying off the old mortgage plus any fees and expenses associated with the loan. Borrowers who | more...

December 2, 2015

HUD 4000.1 On FHA Loan Limits

By Joe Wallace

Ever since the FHA and HUD updated FHA single-family home loan rules previously found in HUD 4155.1 and HUD 4155.2, we’ve been examining critical areas of the new FHA loan rulebook. One such area involves calculating the maximum FHA loan guarantee limit. FHA issues new guidelines for FHA mortgage loan limits each year, but what does HUD 4000.1 say about this process? “The National Housing Act establishes the maximum Mortgage limits and the mortgage amounts for all FHA mortgage insurance programs…Mortgage limits are calculated based on the median house prices in accordance with the statute. FHAs Single Family mortgage limits are set by Metropolitan Statistical Area and county and will be published periodically.” Furthermore, “A Mortgage that is to be insured by FHA cannot exceed the Nationwide Mortgage Limits, the | more...