Articles Published in: 2016

October 18, 2016

Employment and Income Requirements For FHA Mortgages

A reader asks, “I am a working part time. My annual income is 14,400. I work only 8 hrs a week. I have a savings of $30000. Will I be eligible to get a house loan of $76000? I have a very good credit score. I am working in the current place for past 8 months. I had a full time job before.” FHA loan rules do not specify a minimum or maximum income that makes a borrower eligible for an FHA mortgage loan. What the loan rules DO require is that the income a borrower has be verifiable, reliable, and likely to continue. The lender will have to make a judgment call on whether the borrower’s income meets this criteria. Another important factor in FHA loan approval is the | more...

When Is An FHA Loan Better Than A Conventional Loan?

October 17, 2016

Residency And Occupancy: FHA Loan Rules

By Bruce Reichstein

FHA loan rules have requirements for both U.S. residency for potential borrowers, and occupancy for approved borrowers. Did you know that HUD 4000.1 states that an FHA loan applicant does not have to be a U.S. citizen in order to apply for an FHA mortgage or refinance loan? U.S. citizenship is not required, but legal documentation showing the applicant’s status will be a condition of loan approval. The FHA loan program is open to both non-permanent resident aliens and lawful permanent resident aliens. The FHA loan rules also instruct the lender, “Non-U.S. citizens without lawful residency in the U.S. are not eligible for FHA-insured Mortgages”. While all borrowers are required to show proof of a Social Security Number, this cannot be used to prove immigration or work status, according to | more...

October 17, 2016

Mortgage Loan Rates: Friday Bounce

By Joe Wallace

In our last report, we noted that mortgage loan rates had made some improvement, but the very next day we saw rates bouncing to highs not seen in several months-a move that not only affected conventional mortgages, but also served to push FHA mortgage loan interest rates out of their long-held comfort zone and into a new range. Some market watchers noted that the move higher didn’t begin until later in the day on Friday, which could have resulted in some lenders failing to change or “reprice” on that day. Depending on how things go on Monday, that could mean higher numbers for some lenders who didn’t reprice already. That means those contemplating their options when it comes to locking in a mortgage loan interest rate commitment with their lender | more...

October 14, 2016

Mortgage Rate Trends: Recovery

By Joe Wallace

After ten days of no improvement, upward pressure on interest rates finally broke on Thursday, but some market watchers are not ready to declare that day’s respite from higher numbers a decisive victory. In fact, some say this could be a resting moment before rates continue to push upward. Some industry professionals are using the word “lock” quite a bit in public statements aimed at those who haven’t yet made an interest rate lock commitment with their lenders and are within a month to two months of closing. It’s hard to argue with their logic, and rates have been low for quite some time. Is the current trend just a short term development or do we have a new range of rates to look forward to in the coming months? | more...

How much can I borrow with an FHA refinance loan?

October 13, 2016

FHA Refinance Loans: What Are Your Options?

By Joe Wallace

FHA loans aren’t just for new purchases. You can also apply for an FHA refinance loan for an existing FHA mortgage, a conventional loan, or other types of mortgages depending on the type of refinancing you need. HUD 4000.1 describes the rules for FHA refinance loans, including a basic list of all the types of refinancing available and what they are meant to do for the borrower: -No cash-out refinances of FHA-insured and non FHA-insured Mortgages are designed to pay existing liens. These include: Rate and Term refinance, Simple Refinance, and Streamline Refinance. -Cash-out refinances are designed to pull equity out of the Property. -Refinances of non FHA-insured Mortgages are available for qualified Borrowers in negative equity positions (Short Refi). -Refinances for rehabilitation or repair (Section 203(k)). That information is | more...

FHA One-Time Close Construction Loans In 2019

October 13, 2016

Second Appraisal Rules For FHA Mortgages

By Joe Wallace

There are some circumstances where a borrower may wonder about requesting a second appraisal on a property to be purchased with an FHA mortgage. For example, if the loan applicant decides to switch lenders, is a new appraisal required? What about cases where there’s a disagreement over the results of the appraisal? Many of the answers to these questions are circumstantial-it all depends on the nature of the request. Sometimes a second appraisal may be permitted IF conditions described in HUD 4000.1 exist. But in other cases a second appraisal is simply not permitted. One good example of that-a borrower or seller cannot request a second appraisal to increase the fair market value of the property. However, if “material deficiencies” are suspected in the original appraisal, the market value of | more...

October 12, 2016

HUD Announces Relief Measures Following Hurricane Matthew

By Joe Wallace

The Department of Housing and Urban Development has announced relief measures following Hurricane Matthew. According to the HUD official site, “U.S. Housing and Urban Development Secretary Julian Castro today announced HUD will speed federal disaster assistance to the States of North Carolina, Florida, and Georgia and provide support to homeowners and low-income renters forced from their homes due to Hurricane Matthew.” The HUD press release announcing this relief also ran a list of areas President Obama issued a disaster declaration for-the following counties have been declared federal disaster areas: North Carolina: Beaufort, Bladen, Columbus, Cumberland, Edgecombe, Hoke, Lenoir, Nash, Pitt, and Robeson. Florida: Brevard, Duval, Flagler, Indian River, Nassau, St. Johns, St. Lucie and Volusia. Georgia: Bryan, Camden, Chatham, Glynn, Liberty, and McIntosh. According to the press release, HUDNo.16-155, “The | more...

October 12, 2016

Mortgage Loan Interest Rate Trends: Moving Higher

By Joe Wallace

Mortgage loan interest rates have been in a short-term trend with no improvements and/or upward movements for well over seven business days. Some market watchers believe this trend will persist a bit longer, and even though the highest rates we’ve seen in the trend are still considered low compared to previous years, it makes for a difficult choice for any borrower on the fence about locking or floating. 30-year fixed rate conventional mortgage loan interest rates are still within a range between 3.5% and 3.625%, but there are far fewer lenders offering the bottom end of that best-execution range. 3.625% is far more common, best execution. As upward pressure continues (assuming it WILL continue in the short term) we will eventually see that range disappear in favor of the higher | more...

October 11, 2016

Flood Zone Rules For FHA Loans

By Joe Wallace

A reader asks, “Can you please state what the guides are for manufactured homes in a flood zone?” FHA loan rules for ANY type of property include the following guidelines for flood zones: “The Mortgagee must determine if a Property is located in a Special Flood Hazard Area (SFHA) as designated by the Federal Emergency Management Agency (FEMA). The Mortgagee must obtain flood zone determination services, independent of any assessment made by the Appraiser to cover the Life of the Loan Flood Certification.” Furthermore, FHA loan rules state that any type of property to be purchased with an FHA mortgage loan would not be eligible when the following circumstances apply: -a residential building and related improvements to the Property are located within SFHA Zone A, a Special Flood Zone Area | more...

October 11, 2016

FHA Appraisals: A Reader Question

By Joe Wallace

A reader asks, “If a person purchased a home with an FHA loan, and later found out that there were serious mold issues with the home that had been covered up with sheets of drywall and structural issues with a foundation which is collapsing and joists sagging due to not building to code.would there be any recourse for the owner of a home that now cant afford to do the necessary repairs to fix?” These are serious issues, and unfortunately there is no one set answer-much depends on the circumstances involved. There are several questions which can affect the answer including whether or not the borrower paid for a home inspection in addition to the FHA appraisal. The FHA official site warns borrowers in no uncertain terms that the FHA | more...