Articles Published in: December 2016

When Is An FHA Loan Better Than A Conventional Loan?

December 30, 2016

Property Types Eligible For FHA Mortgages in 2017

FHA mortgages for single family residences include a wide variety of eligible property types. You can purchase a typical suburban home with an FHA loan, a condo unit, manufactured home, modular home, or other approved structure meant to house a family that qualified under FHA loan rules. These properties can be single-unit homes or have up to four living units. While it’s true that not all lenders approve loans for all the possible types of housing available under the FHA program (some lenders choose not to loan money for mobile homes or new construction homes, for example) there are some general guidelines about the types of property you can purchase from a participating lender. FHA mortgages are approved for those who intend to be owner-occupiers. FHA mortgages are not available | more...

December 29, 2016

Mortgage Loan Interest Rates: Lower

By Joe Wallace

Mortgage loan interest rates clawed back some of their losses on Wednesday, dropping down to 14-day lows and creeping back from the mid four-percent zone a bit. The gains came after bond market activity favorable to mortgage loan rates. Professional market watchers say we’re likely not to see any significant, decisive movement until well after the New Year’s Eve holiday, but the improvements on Wednesday are encouraging to some. There are plenty of factors that could still put upward pressure on mortgage rates including economic uncertainty related to the American political climate. “Wait and see” is the phrase most used when contemplating this as a spoiler on mortgage rates. Borrowers unsure of whether to lock in a mortgage rate commitment with a lender or not should discuss the current rate | more...

December 28, 2016

Buying HUD Homes With FHA Loans

By Joe Wallace

On the FHA/HUD official site, there is a section covering the purchase of HUD homes, including tips on which FHA home loan might be best for these transactions. According to the Department of Housing and Urban Development official site, “A HUD home is a 1-to-4 unit residential property acquired by HUD as a result of a foreclosure action on an FHA-insured mortgage. HUD becomes the property owner and offers it for sale to recover the loss on the foreclosure claim”. These homes are offered for sale via HUD. Who is qualified to buy one of these properties? According to HUD.gov, “Anyone who has the required cash or can qualify for a loan (subject to certain restrictions) may buy a HUD Home. HUD Homes are initially offered to owner-occupant purchasers (people | more...

December 27, 2016

HUD Announces Additional Relief To Disaster Areas

By Joe Wallace

As 2016 draws to a close, HUD announces that some of the hardest hit natural disaster areas are getting nearly $2 billion in additional federal relief. According to a Department of Housing and Urban Development press release, HUD “awarded an additional $1.8 billion to help Louisiana, West Virginia, Texas, North Carolina, South Carolina and Florida to recover after severe flooding events that occurred earlier this year. Provided through HUDs Community Development Block Grant Disaster Recovery (CDBG-DR) Program, these recovery funds will assist the most impacted communities that experienced the most serious damage to their housing stock.” Earlier this month, President Obama signed the Fiscal Year 2017 Further Continuing Resolution, which became law on December 10, 2016. The resolution is described on the HUD official site as a stopgap spending measure. | more...

December 27, 2016

Mortgage Rate Trends: Slightly Lower Ahead of Holidays

By Joe Wallace

Mortgage rate trends ahead of the extended weekend included some very minor improvements-welcome changes from the recent steady upward momentum we’ve seen post-election. But these changes aren’t enough to push best execution rates lower, it’s going to take either many days of sustained-but-small improvement or some more significant changes in the short term to revise rates lower. Borrowers affected by the recent incremental moves lower will likely see the changes reflected in closing costs. Just ahead of the holiday weekend, 30-year fixed rate conventional mortgages were reported in a best execution range between 4.25% and 4.5%. That’s quite a long spread, but it is important to keep in mind that the most competitive lenders (and a small number of them, too) are the ones at the lowest end of the | more...

December 26, 2016

Happy Holidays!

By Joe Wallace

Happy Holidays 2016! The Monday AFTER December 25 might seem to be a strange time to make that statement, but today is the observed holiday since Christmas came over the weekend this year. Many banks are closed, the markets that affect mortgage rates aren’t operating to day, and we too observe the extended holiday weekend. We’ll resume our usual posting schedule on Tuesday including an updated look at mortgage rate trends. Thank you for reading!

December 23, 2016

FHA Loan Limits in 2017 Corrected

By Joe Wallace

FHA loan limits for 2017 were posted on the FHA/HUD official site recently, but the Federal Housing Administration has updated the original post with a correction. According to an FHA mortgagee letter, “Mortgagee Letter 16-20 set Federal Housing Administration forward mortgage limits for calendar year 2017, but indicated incorrect ceiling limits for Alaska, Hawaii, Guam, and the Virgin Islands, which are special exception areas which allow for higher construction costs.” That’s according to Mortgagee Letter 2016-25, which adds the “the correct forward mortgage limit ceiling for those special exception areas”. The Mortgagee Letter is quick to add that there are NO CHANGES for FHA loan limits, including those in the special exception areas. According to the new mortgagee letter: “While ML 16-20 referenced incorrect ceiling limits for the special exception | more...

December 22, 2016

Mortgage Rate Trends: Slightly Lower

By Joe Wallace

Since our last report on mortgage rate trends, we’ve seen a minor bit of improvement in interest rates, but the numbers still remain at highs not seen in the last couple of years. The improvements will likely be reflected in closing costs where applicable, and the range of rates is still at or near what it’s been in recent days. That means that 30-year fixed rate conventional mortgages are holding in a range between 4.375% at the very bottom end and 4.5% at the top end, best execution. FHA mortgage rates are holding in a best execution comfort zone of 4.0%, though if upward movement resumes we could see this turn into a range of rates also. Best execution rates assume ideal borrowers. Your FICO score, loan repayment history, and | more...

December 21, 2016

FHA Anti-Flipping Rules

By Joe Wallace

In general, FHA requirements and regulations discourage the practice of flipping, which is defined as buying a home (distressed or otherwise) and quickly reselling it at an inflated price. According to the FHA loan single-family rule book, “The eligibility of a Property for a Mortgage insured by FHA is determined by the time that has elapsed between the date the seller has acquired title to the Property and the date of execution of the sales contract that will result in the FHA-insured Mortgage.” HUD 4000.1 defines the sellers date of acquisition as, “the date the seller acquired legal ownership of that Property. FHA defines the resale date as the date of execution of the sales contract by all parties intending to finance the Property with an FHA-insured Mortgage”. Homes sold | more...

December 21, 2016

FHA Short Refi Loans in 2017?

By Joe Wallace

HUD 4000.1 is the FHA single family home loan rule book. Whether you are purchasing a suburban home, a condo unit, or a mobile home with an FHA mortgage, the rules in HUD 4000.1 pertain to your FHA loan transaction. This set of rules also includes guidance on FHA refinancing loans including a program known as an FHA short refi loan, also called “Refinance of Borrowers in Negative Equity Positions Program”. This program, according to HUD 4000.1, “allows the Mortgagee to refinance a non FHA-insured Mortgage in which the Borrower is in a negative equity position”. That’s commonly known as being “underwater” on a home loan. An FHA short refi requires the lender to “write off at least 10 percent of the unpaid principal balance”. The borrower must be in | more...