Articles Published in: January 2016

January 14, 2016

FHA HECM Loan Facts

The FHA single-family loan program includes reverse mortgages–a loan program where a borrower can apply for a loan that requires no monthly payments, offers cash back to the borrower, and is based on the value and equity in the home. If you are looking for a reverse mortgage, the FHA program might be just what you need. Here are some basic facts about the FHA reverse mortgage loan option: FACT: FHA reverse mortgages are known as Home Equity Conversion Mortgages or HECM for short. These two terms refer to the same thing when it comes to FHA reverse mortgages. FACT: FHA HECM loans are for borrowers aged 62 or older who either own their home outright or are very close to doing so. HECM loans are declared due when the | more...

January 14, 2016

Mortgage Rate Trends: 60-Day Lows Holding

By Joe Wallace

For the past five business days, we’ve seen mortgage rates moving lower than they’ve been in about eight weeks. Some industry professionals are calling it a rally. Whatever the label, we’re seeing mortgage loan rates moving to the (best execution) rock-bottom of the four percent range or lower depending on the lender. 30-year fixed rate conventional mortgages are, best execution, most aggressively offered just under the four percent range at the time of this writing, while FHA mortgage loan rates are still holding steady at a best execution 3.75%, though you will find greater variation among participating lenders than with conventional mortgage counterparts. The causes for this rally include tough days for certain types of trading–to those not accustomed to watching mortgage rates it may seem like a contradiction that | more...

January 13, 2016

FHA Refinance Loan Facts And Fictions

By Joe Wallace

If you are thinking about your refinance loan options in 2016, now is a good time to review some FHA refi facts. Planning for an FHA refinance loan is important, and if you start early the same way as preparing for the original purchase of your loan you may save yourself valuable time later on in the process. It’s important to take enough to time to review your recent credit history, make sure you have no late or missed payments in the 12 months leading up to the loan application, and make sure there are no errors or evidence of identity theft on your credit report. Here are some basic facts–and fictions–about FHA refinancing: FACT: FHA refinance loans are available for existing FHA loans and non-FHA mortgages alike. You can | more...

January 13, 2016

FHA Home Loan Questions: FICO Scores

By Joe Wallace

A reader got in touch recently in the comments section to ask a question about FICO scores and FHA home loan applications. “My new wife’s credit score is 749 and mine is 620 due to an ugly divorce and transfer several years ago. We make over 287K per year with very little debt. Would we qualify for a loan together with a favorable rate? All debt paid except car loans.” This question implies that FICO scores are the deciding factor for an FHA loan approval decision, and while credit scores are very important, they are not the only factor taken into account by the lender. When you apply for an FHA home loan, the lender will examine not just your FICO scores, but your history of payments–especially those made in | more...

January 12, 2016

FHA Loans: Fact Versus Fiction

By Joe Wallace

FHA loans are available for a wide variety of purchases. Did you know that FHA mortgages are offered for town homes, condo units, mobile homes, and many other types of properties? There are some facts you should know about FHA mortgages as well as some fictions to avoid. Here are just a few: FACT: FHA loans are for most types of single-family residence classified as “real property”. That means homes that are (or will be) permanently fixed to a foundation that meets state/local building code and FHA minimum standards. Mobile homes, manufactured homes, modular housing and other types of homes may qualify if they meet FHA standards. However motor homes, houseboats and other types of vehicles that cannot be fixed to a permanent foundation will not qualify for an FHA | more...

January 12, 2016

FHA Refinance Loans And FICO Scores

By Joe Wallace

Are you considering an FHA refinance loan? Are you concerned about your credit scores, or whether and new loan will require a credit check? There are some important issues to keep in mind about FHA refinancing that can help you in the planning stages of your new loan application. First, not all FHA refinance loans have an FHA-required credit check. FHA Streamline refinance loans (for existing FHA home loans only) have no FHA requirements for a new credit check though your lender may require one anyway. That is permitted under the rules for FHA refinances. FHA Streamline refinance loans are intended for owner-occupied homes that were originally purchased with an FHA mortgage. However, the borrower does not have to stay with the original lender that issued the loan. You are | more...

What happens to my FHA loan in a natural disaster?

January 11, 2016

FHA Home Loan Appraisals: Some Basics

By Joe Wallace

In 2015, the FHA and HUD published HUD 4000.1, a new and comprehensive rulebook for FHA single family mortgage loans. This new set of rules updated, revised, expanded, and restated FHA single family mortgage loan policies. One area critical to the entire home buying process with an FHA mortgage is the appraisal process, so we are examining this process as described in HUD 4000.1 to give you a better idea of FHA/HUD policy as it now stands with the new rules. HUD 4000.1 begins by defining its terms. The rules say the FHA appraiser is responsible for insuring a home to be purchased or refinanced (where an appraisal is required to refinance) meets FHA/HUD standards–Minimum Property Requirements (MPRs) and Minimum Property Standards (MPS). “The Appraiser must observe, analyze and report | more...

January 11, 2016

Mortgage Rate Trends: Lower In Spite Of Jobs Report

By Joe Wallace

On Friday, mortgage rates moved lower in spite of a scheduled economic data release (Friday’s jobs report) that showed a more robust job market. That news has in the past had the power to negatively affect mortgage loan rates–good economic news often comes out to the detriment of mortgage rates depending on investor reaction to that data. On Friday rates moved lower due to other economic factors including market woes in China and declining oil prices. Investor behavior in reaction to those factors had more of an influence on Friday than the jobs report. That’s not unusual in the grand scheme of things. Much depends on what factors hold investor attention on a given day. On Friday the jobs report was not (but easily could have been) the main event | more...

January 8, 2016

FHA Loan Rules: When Landlords Sell To Tenants

By Joe Wallace

Sometimes when a borrower wants to buy a property with an FHA mortgage, it’s a situation where the applicant has been renting for some time and has an offer from the landlord to purchase. FHA loans do permit these transactions but there are special rules that govern them. These rules, published in HUD 4000.1, state that in some cases a higher down payment is required. But in others an exception to that requirement is possible depending on the relationship between landlord and tenant. The higher down payment requirement is needed because tenant/landlord sales can fall under something known as the “identity of interest” rule, which requires a 15% down payment in cases where identity of interest applies. According to HUD 4000.1: “The maximum LTV percentage for Identity-of-Interest transactions on Principal | more...

January 8, 2016

FHA Loans, Fair Housing Laws And Your Rights: One Family’s Fair Housing Story

By Joe Wallace

Fair Housing laws ensure that all who seek housing get fair and equal treatment. It doesn’t matter if you are a renter, a house hunter, or somewhere in between renting and owning; fair housing laws apply to you and assign certain rights and responsibilities depending on which side of the transaction you are on. We write about fair housing cases from time to time because acts of discrimination can and sometimes do affect the FHA loan process. The people discriminated against are sometimes the only ones standing in the way of future violations of fair housing laws–those who report the illegal treatment can get it stopped. The video above is published by the Department of Housing and Urban Development and is part of a HUD video project aimed at educating | more...