Articles Published in: 2016

July 15, 2016

Mortgage Rate Trends: Rising

Mortgage loan rates have been on the rise most of the week; three out of four business days were marked by higher numbers or closing costs and with Brexit, overseas terrorism headlines, and domestic scheduled economic data releases, it’s possible we’re going to see rates creeping up over the short term next week much the way we did this week. At the time of this writing, 30-year fixed rate conventional mortgages are, best execution, reported at or near 3.375%, up this week from the previous week’s range bottoming out at 3.25%. FHA mortgage loan rates are currently holding in their 3.25% comfort zone. How long can they persist at or near these levels? Next week will be interesting to watch. (As always, best execution rates listed here assume ideal conditions; | more...

July 14, 2016

FHA Loans and Bankruptcy

By Joe Wallace

A Few Words About Bankruptcy from FHA.com on Vimeo. Some borrowers want to know how credit issues such as foreclosure, Chapter 7 bankruptcy, and Chapter 13 bankruptcy can affect their ability to get an FHA mortgage loan or refinance loan. While those who have been through such proceedings may have a better understanding of what happens to your credit, many who are facing the option of filing bankruptcy, going into loan default and foreclosure, or even doing a deed-in-lieu of foreclosure may not understand what’s at stake. The video above explains some basics about bankruptcy. But how does bankruptcy in particular affect your ability to get an FHA loan? Like foreclosure and deed-in-lieu, filing bankruptcy usually requires a mandatory “seasoning period” or waiting time between the bankruptcy and the new | more...

July 14, 2016

FHA Loan Questions: Refinancing After Foreclosure

By Joe Wallace

A reader asked us recently, “Is it true that I have to wait to refinance my FHA mortgage after having had a foreclosure on another property I own?” FHA loan rules regarding new loans in the wake of a foreclosure are found in HUD 4000.1, page 247 which states: “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 assignment. This three-year period begins on the date of the DIL or the date that the Borrower transferred ownership of the Property to the foreclosing Entity/designee.” FHA loan rules do provide certain exceptions. “The Mortgagee may grant an exception to the three-year requirement if the foreclosure was the | more...

July 13, 2016

FHA Loan Appraisal Fees: What You Should Know

By Joe Wallace

The Appraisal Fee from FHA.com on Vimeo. FHA loans, like their conventional counterparts, have closing costs, fees, and expenses all borrowers will need to budget and save for. One such fee is the FHA appraisal fee. The video above helps explain the appraisal fee, but there are some common issues related to appraisals you should also keep in mind. One is that sometimes appraisals require corrections as a condition of loan approval. And that can require a follow-up known as a compliance inspection. Compliance inspections, where required, also come with a fee. This fee is for services rendered and must be paid regardless of the outcome. The same is true of your appraisal fee-the service provided by the professional is what the fee is for, so the outcome of the | more...

July 13, 2016

Mortgage Loan Interest Rate Trends: Moving Higher

By Joe Wallace

Mortgage loan rates moved decisively higher on Tuesday, marking the first real upward trend we’ve seen since the Brexit vote. It’s true that you can’t have a sustained drop in rates without some kind of eventual pushback; that’s what we’re seeing now for a variety of reasons. 30-year fixed rate conventional mortgages have left their previous range behind; last week the bottom end of that range rivaled FHA mortgage rates at 3.25% best execution for some of the most aggressive lenders. Now it’s back up to 3.375% territory, and some lenders are offering best execution rates higher than this. FHA mortgage loan rates are still holding at 3.25% at the time of this writing, but if there is more significant change to rates in the coming days we’re likely to | more...

July 12, 2016

More On FHA Loans And Down Payment Gift Funds

By Joe Wallace

In our last blog post we answered a reader question about whether it’s acceptable to receive gift funds from a family member for an FHA borrower’s down payment. FHA loan rules in HUD 4000.1 permit this, but the gift funds must come from approved sources. For example, no one with a financial stake in the outcome of the FHA loan can provide down payment gift funds for a borrower. And for down payment gift funds that do come from an approved source, the lender has specific instructions in HUD 4000.1 on how to proceed. For example, on page 219 of HUD 4000.1, we learn: “The Mortgagee must obtain a gift letter signed and dated by the donor and Borrower that includes the following: –the donors name, address, and telephone number; | more...

July 12, 2016

FHA Home Loans and Down Payment Funds

By Joe Wallace

A reader asks, “Can I use gift funds from a family member to make my down payment on an FHA mortgage?” This is a common question. FHA mortgages do require a lower down payment than many conventional loans, but a down payment is still required and must come from approved sources. Your lender will be required to verify the source of down payment funds, which must not come from uncollateralized loans, credit card cash advances, “payday loans”, etc. The loan rules that affect down payments are found in HUD 4000.1 in a variety of places but our answers are coming from page 213-214, which begins by stating the FHA definition of a down payment. The rulebook calls the down payment a “Minimum Required Investment” or MRI for short: “Minimum Required | more...

What happens to my FHA loan in a natural disaster?

July 11, 2016

Home Loan Debt Ratios Explained

By Joe Wallace

Analyzing Your Debt Ratio from FHA.com on Vimeo. When you fill out a home loan application, your lender will need employment and income documentation in order to process your loan. The lender is responsible for verifying that you have employment and that your income is sufficient to justify the loan. Not all income counts as “verifiable” by the lender; FHA loan rules have guidelines that include making sure the income is stable and likely to continue. Your lender may also have standards which must be met where income is concerned. There are many types of income, and not all of it comes from employment. Do you receive government assistance, get payments from a trust fund, are entitled to pay or benefits from a government agency related to disability, child support, | more...

July 11, 2016

Mortgage Rate Trends: Higher, Then Steady After Friday Jobs Report

By Joe Wallace

In our last report we mentioned that it wouldn’t be a surprise that, in our next look at mortgage loan interest rate trends if we had some higher rates to discuss. That did happen last Thursday as mortgage loan rates crept a bit higher, but when markets closed on Friday after the much-anticipated jobs report, rates were holding steadier than the day before. That means that following a nine-day winning streak with lower rates, 30-year fixed rate conventional mortgages are now within a range, best execution, of between 3.25% for some lenders and 3.375% for others. It’s not often that conventional lenders offer rates in the same range as FHA loans, and FHA’s best execution 3.25% remains for now; if conditions stay the same (more or less) we could find | more...

July 8, 2016

FHA Loans Versus Conventional Loans

By Joe Wallace

Here’s the Scoop on Conventional Loans from FHA.com on Vimeo. What are the differences between FHA home loans and conventional loans? There are several, some features of mortgage loans can vary depending on the lender, and state law may also affect how your home loan is handled depending on circumstances, but there are a few very important general differences to keep in mind when comparing FHA loans to conventional loans. The first difference is the basic nature of the loan itself. Conventional loans are not backed by the government, unlike FHA home loans where the FHA guarantees a portion of the loan to make it more attractive to the lender to issue credit. In the event that a borrower defaults on an FHA loan, the lender and the FHA have | more...