Articles Published in: 2015

October 2, 2015

Mortgage Rates: Lower Ahead Of Jobs Data

At the end of the business day on Thursday, mortgage loan rates had fallen again, making a fourth straight day this week of improvement ahead of today’s (Friday) jobs report. That report (the “Employment Situation Report”) has the potential to move rates in either direction depending on the contents of that report and investor reaction to it. Borrowers who have been floating up to this point–not making an interest rate lock decision/agreement with the lender–should know that while there’s always a risk associated with floating, the risk increases with scheduled economic data releases like this one. Best advice if you aren’t sure–ask your lender which way he or she thinks the wind is blowing, so to speak, with rates at the moment. The numbers are very good at this point | more...

October 1, 2015

HUD 4000.1 Appraisal Requirements: Safety Hazards

By Joe Wallace

With the publication of HUD 4000.1, the new FHA Single Family Home Loan policy handbook, we’ve been addressing certain rules and regulations found in the new rules to help borrowers and lenders alike understand official policy, updates, changes, and restatements of previous regulations as published by the FHA/HUD. FHA appraisals are also affected by the new handbook. One area that contains crucial information about the appraisal process is the section of FHA appraisal rules that govern safety/environmental hazards as might be found during the appraiser’s review of a property to be purchased with an FHA mortgage. In some cases, you may notice some additional features to this section, and revised language that gives more clarity or guidance for appraisers and lenders. From HUD 4000.1 Section II Part B: “The Appraiser | more...

October 1, 2015

FHA Loan Reader Questions: Occupancy

By Bruce Reichstein

One common question many potential borrowers have about FHA mortgage loans has to do with the FHA’s occupancy requirement. One reader asked us recently, “What is the definition of Occupancy defined by FHA? Does using the space as an office suffice?” FHA single family home loans are only for residential purposes. Borrowers are permitted to use a portion of the property they buy with an FHA loan for business purposes, but the non-residential use of the property cannot exceed 25% of the total floor space of the home. FHA loan occupancy requirements state that the borrower must intend to use the home as the primary residence for at least one year. That means the borrower must move in and take possession of the property within a reasonable amount of | more...

October 1, 2015

Mortgage Rate Trends: A Week Marked by Improvements So Far

By Joe Wallace

It’s been a week full of downward movement for mortgage loan rates; Wednesday at the end of the market day rates were being reported in lows we haven’t seen for months. 30-year fixed rate conventional loans are in a range (best execution) between 3.75% and 3.875% at the time of this writing. We haven’t seen conventional loan rates come near 3.75% for some time now and if the downward trend continues we could see this range persist or move closer to 3.75% for more extremely well qualified borrowers. FHA mortgage rates, which have long stayed in a 3.75% comfort zone, have finally broken out of that in favor of a range of best execution rates between 3.5% and 3.75%. Remember, FHA rates can vary more among participating lenders than their | more...

September 30, 2015

FHA Loans For Rental Properties?

By Joe Wallace

A reader asked us a question recently about purchasing rental property with an FHA mortgage: “I’m considering cosigning on a rental property for my son so he can move in with friends. He has no credit established yet. My husband and i are also in the process of looking to move. How will cosigning affect us if we want to buy in the next 2-6 months and go with an FHA loan?” Is the reader question referring to a situation where the parent wishes to co-borrow with the child to purchase a residence for the child to occupy? Or does it refer to co-signing on a lease to help the child, with the parents later applying for an FHA loan for themselves? In the case of an FHA borrower who | more...

September 30, 2015

FHA Single Family Home Loan Policies: Credit Qualifying Under HUD 4000.1

By Joe Wallace

With the publication of HUD 4000.1 in its entirety, FHA single family home loans have a new policy handbook. It contains existing policy, revised or amended loan rules, and other changes that are relevant when it comes to applying for a single family home loan or refinance loan. With the new rule book, we’re examining the contents of those rules in a variety of areas to show the current state of FHA loan rules, credit requirements, appraisal rules and other important topics. Let’s examine some basics of qualifying for an FHA mortgage under the new rulebook. In general, HUD 4000.1 instructs the lender, referred to here as “the mortgagee”, as follows: “The Mortgagee must obtain a credit report for each Borrower who will be obligated on the mortgage Note. The | more...

Can I buy a manufactured home with an FHA loan?

September 29, 2015

Changes To Home Loans Coming In October

By Joe Wallace

The Consumer Financial Protection Bureau (CFPB) is a government agency designed to help consumers and protect their interests against fraud and unfair practices. CFPB issued a statement recently about new federal guidelines that will affect the mortgage lending process, making it easier for borrowers to understand the transaction. The agency has announced that starting October 3, 2015, those who apply for “most mortgages” on or after that date, “the stress of shopping for a mortgage will be reduced, as our new mortgage disclosure rule takes effect. The new rule and disclosures ease the process of taking out a mortgage, helping you save money, and ensuring you know before you owe.” What are the changes you should be aware of? According to ConsumerFinance.gov: Four overlapping disclosure forms will be streamlined into | more...

September 29, 2015

FHA Loan FICO Scores And Payment History

By Joe Wallace

When the FHA loan rule book (HUD 4000.1) lists its minimum FICO score requirements, some people forget that these requirements are minimums and that participating lenders are free to require higher FICO scores, and often do. We get plenty of reader questions about FHA FICO score requirements–here’s a recent example: “I have my 3 FICO scores they are 633,601, and TransUnion is 565…I have credit but some late payments the last being December 2014…My question is do you think I could get a FICO loan for the mortgage or would I need to bring my FICO up?” The answer to the reader’s question is complex for two reasons–lender standards apply and while based on what’s listed here the reader technically qualifies for an FHA mortgage loan, the lender’s FICO score | more...

September 28, 2015

FHA HECM Loans and Death Of The Primary Borrower

By Joe Wallace

We get many questions about FHA HECM loan rules. Some of those questions have to do with the legal rights and/or obligations associated with HECM loans for primary borrowers and what happens to the non-borrowing occupant if the borrower dies (in terms of ownership and occupancy of the property). Here’s a recent question that showed up in the comments section: “Several years ago my father and I took out a Reverse Mortgage on our home. He had to be the primary borrower because of his age and I was and still am not 62. I am a co-owner of the house and my name is on the deed. I had to go through the counseling and I had to sign all papers that he signed. My question is when something | more...

September 28, 2015

Mortgage Rate Trends: Slightly Higher But Holding Within The Range

By Joe Wallace

On Friday, mortgage loan rates were generally found within the range of rates reported previously (see below). There was some upward movement on rates but in general 30-year fixed rate conventional mortgage loan interest rates are, best execution, between 3.875% and 4.0%. As of Friday FHA mortgage rates were in their best execution comfort zone of 3.75% and as always borrowers may notice more variation among participating lenders than with conventional counterparts. Best execution assumes ideal conditions such as outstanding FICO scores and other financial qualifications. The numbers reported here are not available to all borrowers or from all lenders. Your experience may vary. There are some scheduled economic data releases due this week, so it’s possible we could see some alteration of rates within the range, but Friday’s employment | more...