Articles Published in: June 2016

June 22, 2016

FHA Loan Questions: Restrictions On Resale

One type of frequently asked question that sometimes pops up involves whether or not FHA mortgage loans have any restrictions on the resale of a home. While FHA loan rules require a borrower to be free to sell the property whenever they wish, there are certain time restrictions on the resale of a home when it comes to purchasing a “flipped” house with an FHA mortgage. Specifically, HUD 4000.1 has a section dedicated to this practice, and addresses it accordingly. According to Page 140 of HUD 4000.1, “flipping” is defined as follows: “Property Flipping is indicative of a practice whereby recently acquired Property is resold for a considerable profit with an artificially inflated value, often abetted by a Mortgagees collusion with an Appraiser.” This practice is restricted when it comes | more...

June 21, 2016

More On FHA Adjustable Rate Mortgages

By Joe Wallace

In a previous blog post we discussed FHA adjustable rate mortgage loans and looked at some aspects of how these loans work. FHA adjustable rate mortgages, also known as ARM loans or FHA ARM loans, feature an introductory rate that the borrower and lender will negotiate. This rate will expire at some point and the new rate will be calculated. The interest rate adjustments over the lifetime of the loan are regulated by an FHA requirement that includes a cap on the amount and severity of the rate changes. As we discussed in the last blog post, there are four components to an ARM loan you should know, which include the following: 1. index 2. margin 3. interest rate cap structure 4. initial interest rate period (also known as a | more...

June 21, 2016

Mortgage Rate Trends: Higher, Faster To Begin The Week

By Joe Wallace

Mortgage rates kicked off the week moving higher and faster than last Friday. The “Brexit” drama in Europe is partly to blame, as investor reaction to the economic uncertainty there influences mortgage rates here. For a while, bond market activity in that regard was favorable to mortgage loan interest rates, but now the wind seems to be shifting directions. The fact that investors don’t know what will happen with the Brexit (will Britain stay in the EU or depart?) and more importantly, don’t know what will happen economically as a result of whatever choice ends up being made is contributing to volatility and potential volatility between now and Brexit referendum time on Thursday. There are some market watchers who are now saying that recent lows are likely as low as | more...

June 20, 2016

What Is An FHA Adjustable Rate Mortgage?

By Joe Wallace

The government’s consumer protection agency, The Consumer Financial Protection Bureau (CFPB), has a page on its official site explaining the differences between a fixed rate mortgage loan and an adjustable rate mortgages, sometimes known as ARM loans. According to the CFPB, “The difference between a fixed rate and an adjustable rate mortgage, is that for fixed rates the interest rate is set when you take out the loan and will not change. With an adjustable rate mortgage, the interest rate may go up or down. With a fixed rate mortgage, the interest rate is set when you take out the loan and will not change”. Does the FHA single-family home loan program offer such a loan? Can borrowers apply for an FHA ARM loan with a participating lender? Yes. Any | more...

June 20, 2016

Mortgage Rate Trends: Slightly Higher On Friday

By Joe Wallace

At the end of the day on Friday, mortgage loan rates had moved higher, but not by much and certainly not enough to pull rates out of territory many are describing as “lowest in years”. In the past week or more we’ve seen rates move, at certain points, into lows that for conventional 30-year fixed rate mortgages actually rivals the FHA loan offerings which are typically lower. Last week we saw 30-year fixed rate conventional mortgages move as low as 3.375% for some of the most competitive lenders, and around 3.625% for others, with a best execution average somewhere in the middle. This territory is in direct best execution competition (technically speaking) with FHA loans which are still in a best execution comfort zone between 3.25% and 3.5%. FHA loan | more...

June 17, 2016

FHA Loan Questions: Liens and Loan Approval

By Joe Wallace

We get many different types of questions about FHA home loans and refinance loans in our comments section. Here’s one of the latest, asking about applying for an FHA mortgage with a lien on the credit record: “I had a lien that was paid off by a relative and the lien released. Is the IRS required to release the date the lien was paid off to the underwriter or is the notice of release sufficient? The debt has been paid, isnt that all that matters?” The most important thing, in general terms, is that there is documentation of the paid-off lien for the lender to review. Without documentation, the lender cannot assume the lien has been paid to the satisfaction of the creditor. While it is true that satisfying the | more...

What happens to my FHA loan in a natural disaster?

June 16, 2016

Your FHA Refinance Loan Options

By Joe Wallace

Do you have an existing home loan you want to refinance? Your options and choices may depend greatly on your needs, especially if it’s a question of getting cash back on the transaction or trying to get into a lower mortgage payment. The first thing you should know about your FHA refinance loan options is that FHA refinancing, depending on the type of loan you seek, does not depend on your having an existing FHA mortgage. If you have a non-FHA loan such as a VA mortgage or conventional loan, you can apply to refinancing these non-FHA loans with an FHA cash-out refinance loan option. FHA cash-out refinancing also comes in a no cash-out option depending on the lender, so if you want to explore this instead of cash-out, have | more...

June 16, 2016

FHA Loan Questions: Legal Issues

By Joe Wallace

A reader asked us a question in the comments section recently about legal issues. “My husband and I assumed my father in laws mortgage back in 2013 with him as a non occupant co-borrower. We have never seen the title and hes withholding it from us. Is this legal for him to do? Also, if our name appears on the tax bill, Does that mean we are listed on the title as well?” There are many things that can affect the answer to questions like these. State law is a big one. Laws vary from state to state as to the nature of certain aspects of home loans, ownership, etc. Another factor is the type of home loan the borrower has. Is this reader’s question about an FHA mortgage, conventional | more...

June 15, 2016

Mortgage Rate Trends: Pots-Fed Rates Are Still Holding At Or Near Recent Gains

By Joe Wallace

All eyes were on the Fed on Wednesday for a much anticipated announcement about the future of interest rate hikes. As a June 15 2016 USA Today article mentions, “The Federal Reserve held interest rates steady on Wednesday and predicted more gradual hikes the next few years amid somewhat slower economic growth and persistent headwinds to a more vibrant economy.” The Fed issued a statement following a two-day meeting, and while there is no indication the Fed definitely will NOT raise rates in July, recent economic data release leads some to believe that July is too early for the Fed to make that move. As the USA Today article states, Fed Chair Janet Yellin was quoted on Wednesday saying, “We need to assure ourselves that the underlying momentum in the | more...

June 15, 2016

FHA Home Loan Questions: Problems With The Home After Purchase

By Joe Wallace

One of the most important things a borrower can do is to pay for the optional home inspection prior to making the commitment to purchasing a home, or making the purchase of the home conditional on the results of the optional home inspection. FHA loans require an appraisal, which is NOT the same as a home inspection, and does not guarantee that the home is free of defects. Recently a reader asked us a question about a situation that may have involved a home inspection that didn’t catch a serious problem. “My daughter and son in law just bought a house two weeks ago with an FHA loan, they did pay for a home inspection which had small repairs to be done, once those were completed they closed on house | more...