Articles Published in: September 2016

September 14, 2016

FHA 203(k) Rehab Loan Options

The FHA has a program that allows borrowers to apply for a mortgage loan in order to improve a property. The FHA 203(k) rehab loan is intended for borrowers who want to buy or refinance property and repair them, but not all borrowers have big rehab projects or work that requires a huge sum of money. What are the FHA 203(k) options for borrowers? There are two different types of 203(k) loans-the typical version is available, but there is also a “limited” 203(k) for projects that require a smaller amount of funds. The FHA official site describes the limited 203(k) as follows: “FHA’s Limited 203(k) program permits homebuyers and homeowners to finance up to $35,000 into their mortgage to repair, improve, or upgrade their home. Homebuyers and homeowners can quickly | more...

September 14, 2016

HUD To Publish New Final Rule And Fair Housing Act Guidance

By Joe Wallace

The Department of Housing and Urban Development is set to publish a new final rule that, among other things, extends Fair Housing protections to victims of domestic violence and sexual harassment. According to a press release on the HUD official site, the agency is “formalizing legal standards under the Fair Housing Act for sexual and other forms of harassment in housing. In addition, HUD is issuing Fair Housing Act guidance on local nuisance ordinances that may lead to housing discrimination against survivors of domestic violence and other persons in need of emergency services.” These are important protections for those seeking FHA home loans (or any other type of mortgage) but also for renters, house hunters, etc. According to the press release, “HUDs final Harassment Rule is titled Quid Pro Quo | more...

What You Need To Know About Your FHA Home Loan

September 13, 2016

FHA Loan Reader Questions: “Identity of Interest” And Below-Market Rents

By Joe Wallace

A reader asks, “My wife and I have resided in a three family home for 29 years. We have paid significantly below market rate rent for all these years because 1) initial elderly landlords just wanted good tenants and they liked us, 2) we looked after the elderly landlord after her husband died for many years and 3) the current owner was always appreciative for what we did for her mother (landlord has since passed and property is in Family Trust, their daughter is the trustee).” “She put the property up for sale and we submitted the winning bid. Now, two weeks before closing, the underwriter has said that because we paid less than market value for all those years that now we have an Identity of Interest and required | more...

How much can I borrow with an FHA refinance loan?

September 12, 2016

FHA Loan FICO Score Rules: What You Should Know

By Joe Wallace

What does it take to get approved for an FHA mortgage? There are a variety of factors that go into mortgage loan approval, and the borrower’s FICO score is just one of those factors. However, your credit report and credit score are an important ones and there can be confusion over how this score is reviewed. What do FHA loan rules tell the lender about FICO scores? HUD 4000.1 instructs the lender about reviewing credit scores, and since a borrower can have three different FICO scores, this is an important part of the rules to be aware of; how does the lender proceed when reviewing more than one credit score? Let’s examine what HUD 4000.1 says on this issue, starting with a definition. All three of a borrower’s credit scores | more...

September 12, 2016

Mortgage Loan Interest Rate Trends: 60-Day Highs

By Joe Wallace

Mortgage rates turned up sharply on Friday after a press conference by the European Central Bank (ECB). There is speculation among market watchers that Friday could be the beginnings of an upward trend in rates, but the talk at the time of this writing is just that-speculation. However, even though past performance does not guarantee future results (especially where markets are concerned) it may be wise to consider the advice of the market watcher for now-we simply can’t predict which way markets might swing next in a post-Brexit climate that includes both the Fed and ECB talking about the future of monetary policy with regards to interest rates, etc. While it’s true that best execution rates for 30-year fixed rate conventional mortgages look the same on paper at the time | more...

September 9, 2016

HUD Announces Fair Housing Settlement With City Of Phoenix

By Joe Wallace

The Department of Housing and Urban Development has announced progress in a fair housing issue involving the city of Phoenix, Arizona. According to a press release on the FHA/HUD official site, “The U.S. Department of Housing and Urban Development (HUD) today announced today an agreement between the City of Phoenix, Arizona and two fair housing organizations resolving multiple complaints of housing discrimination. The Southwest Fair Housing Council (SFHC) and the Arizona Fair Housing Center (AFHC) alleged Phoenix violated the Fair Housing Act, Title VI of the Civil Rights Act of 1964, Section 504 of the Rehabilitation Act, and Title II of the Americans with Disabilities Act (ADA) in its administration of the City’s federally funded Housing Choice Voucher program.” The press release goes on to say that complaints filed by | more...

Can I buy a manufactured home with an FHA loan?

September 8, 2016

FHA Loans For Mobile Homes and Manufactured Homes: A Reader Question

By Joe Wallace

A reader asked recently, “Why does FHA not finance single wide mobile homes?” This question reveals one of the most common misconceptions about FHA loans-that the FHA itself will process your home loan paperwork. It does not; instead, participating FHA lenders will furnish, process, and approve or deny your mortgage application. In some cases the lender may be required to submit this paperwork to the FHA for review before a final decision is made, but the lender is the borrower’s point of contact for the transaction. With that in mind, let’s examine what HUD 4000.1 says about mortgage loans for mobile homes/manufactured housing: “Manufactured Housing refers to Structures that are transportable in one or more sections. They are designed to be used as a dwelling when connected to the required | more...

September 8, 2016

Mortgage Rate Trends: Moving Lower Ahead Of European Central Bank Press Conference

By Joe Wallace

Press conferences are not directly tied to mortgage loan rates, but depending on the contents of a particular press opportunity investor reaction to such things can and often does affect mortgage loan rates. Over the summer, the European Central Bank (ECB) has had an influence on rates due to a variety of factors (and Brexit cannot be ignored in that respect), so with a press conference Thursday morning for ECB officials, it’s entirely possible that we could see investors react to the contents of that. Or not. At the time of this writing the press conference hasn’t happened yet-it is scheduled for 7:30 AM Central Daylight Time. While that doesn’t sound terribly helpful, it is basically a fact of life with respect to mortgage loan rates. Sometimes these scheduled events | more...

September 7, 2016

FHA Loan Rules For Residency: A Reader Question

By Joe Wallace

One not-so-commonly asked questions about FHA loans is still an important issue to address. Here’s a recent reader question on a borrower’s ability to be approved for an FHA mortgage without being a U.S. citizen: “Ive just moved to the US from the UK on a K-1 Fiance Visa. Ive been here around 5 months. Just received my work authorization card through the mail, waiting for my social security number now. Ive been working voluntarily since I arrived…would we qualify for an FHA Mortgage Loan? Ive contacted two lenders who have told us that we might be entitled to a loan but they’re unsure.” The short answer to this questions is that technically speaking, non-U.S. citizens are eligible for FHA home loans unless they are in the United States illegally. | more...

When Is An FHA Loan Better Than A Conventional Loan?

September 7, 2016

FHA Loans After Foreclosure

By Joe Wallace

There are many foreclosure avoidance programs available for consumers struggling to make their mortgage payments; the Obama mortgage, the FHA HAMP program, mortgage loan modifications offered by the lender apart from government programs, etc. But in some cases foreclosure might be unavoidable. The borrower in these circumstances may wonder how long it could take to recover from such a “negative economic event” and become a home owner once more. FHA loan rules specifically address this issue in HUD 4000.1. Page 247 of HUD 4000.1 refers to situations that involve foreclosure or a deed-in-lieu of foreclosure. We learn: “A Borrower is generally not eligible for a new FHA-insured Mortgage if the Borrower had a foreclosure or a DIL of foreclosure in the three-year period prior to the date of case number | more...