Articles Published in: August 2016

August 4, 2016

Facts About FHA Adjustable Rate Mortgages

If you are considering your FHA loan options, at some point you’ll likely consider your choices between mortgage loan interest rate options. Qualified borrowers can choose between a fixed-rate FHA mortgage or an adjustable rate loan. Fixed rate loans seem simple and straightforward enough. The borrower applies for a home loan at an interest rate negotiated between borrower and lender. But what about adjustable rate mortgages? These loans, often called ARM or FHA ARM loans, feature an introductory rate, and a higher rate that begins at a specified point in the course of the mortgage. According to the FHA loan rulebook, HUD 4000.1, “The Mortgagee must establish the initial interest rate and the margin. The margin must be constant for the entire term of the Mortgage.” How long does your | more...

August 3, 2016

FHA Loan Questions: Divorce, Refinancing

By Joe Wallace

A reader asks, “My husband is a co-borrower on a 2nd mortgage or loan with his ex-wife. In the divorce decree, it stated that she was to have the loan refinanced so his name would no longer be on the loan. Its almost been a year, and she has been late several times.” Three weeks ago she moved out of county and allowed their ex-daughter-in-law to move it and make the payments. What steps should my husband take at this time?” FHA loan rules in HUD 4000.1 don’t specifically factor into a question like this, except where specific requirements of the new loan are concerned. The real issues here are legal ones, and for that, the reader will need to discuss the situation with a lawyer with expertise in divorce | more...

August 3, 2016

Mortgage Loan Interest Rate Trends: Higher On Tuesday

By Joe Wallace

Mortgage loan rates pushed slightly higher on Tuesday, thanks in part to bond market activity. There are also scheduled economic data releases this week that have the power to move mortgage loan rates depending on investor reaction to the data in those reports. Market watchers aren’t optimistic that lower rates are coming in the short term, while pointing out that we are still in a range of low rates. 30-year fixed rate conventional mortgages are, at the time of this writing, in a best execution range between 3.375% and 3.5%. That’s up slightly from the a previous range that had 3.625% at the bottom end. FHA mortgage loan rates hold steady at a best execution 3.25%. FHA rates tend to vary more among participating lenders so your experience here may | more...

August 2, 2016

FHA Loan Questions About Seller Contributions

By Joe Wallace

A reader asks, “What extra expenses does a seller pay for a FHA offer compared to a conventional offer when selling their home?” Seller contributions and their limits are covered in HUD 4000.1. It’s impossible to speculate what the differences might be between an FHA mortgage and a conventional mortgage as loan terms may vary from lender to lender. However, FHA loan rules are clear on this subject in terms of what is permitted and what is not. Seller contributions are known as “interested party contributions” in HUD 4000.1. These must be negotiated between borrower and seller, but the agreed-upon contributions must meet FHA standards. FHA loan rules are quite clear-there is a cap on the value of seller concessions. Page 220 of HUD 4000.1 states: “Interested Parties may contribute | more...

August 2, 2016

FHA Home Loan Questions: Mobile Home/Manufactured Home Foundations

By Joe Wallace

We have not one, but two questions in our comments section recently about mobile homes/manufactured homes. Here’s the first: “We had our modular home purged when we ref in 1997. It was required to have tie downs installed when it was refinanced. We are now selling our property and now the lender is requiring that different tie downs need to be done. Is there a clause grandfathered in any tie downs prior to 2001 excludes this update to the old tie downs?” The problem with answering this question is that lender standards, plus state/local building code would definitely apply. It’s not clear what the reader is asking when discussing the “grandfather clause”. Is that in reference to HUD 4000.1 rules governing FHA loans for manufactured homes? Or is that in | more...

August 1, 2016

HUD Announces Settlement In Pennsylvania Housing Discrimination Case

By Joe Wallace

The Department of Housing and Urban Development has announced a settlement in a Pennsylvania housing discrimination case involving a loan applicant on maternity leave. According to the press release on the HUD official site, “…a Conciliation Agreement with Philadelphia-based Citizens Bank of Pennsylvania and Providence, Rhode Island-based Citizens Bank, collectively known as Citizens Bank, settling allegations that the bank violated the Fair Housing Act when it told a female applicant that she would need to return to work before her application for a home equity line of credit could be approved.” Fair Housing Act laws state that it is illegal to discriminate against borrowers, “in the terms, conditions, or privileges associated with the sale or rental of a dwelling on the basis of familial status”, which includes denying a mortgage | more...

August 1, 2016

Mortgage Rate Trends: Lower On Friday

By Joe Wallace

Mortgage loan interest rates fell on Friday, bringing them back down to territory closer to what we saw post-Brexit vote. Friday saw the scheduled release of Gross Domestic Product data, and investor reaction to that report sent rates back down, making three days in a row of recovery. 30-year fixed rate conventional mortgages hit a range of best execution rates on Friday, between 3.375% and 3.5%. FHA mortgage loan interest rates are holding at a best execution 3.25% at the time of this writing. FHA rates tend to vary more among participating lenders, so it’s a good idea to shop around. FHA rates sometimes take longer to catch up with changes in mortgage loan rates, but continued upward or downward trends (or a single day of major change) is enough | more...