Articles Published in: 2016

November 10, 2016

FHA Good Neighbor Next Door Loans

A reader asks, “Im active duty military stationed overseas with 2 years left on my tour, and I’m interested in buying a home in my state or record to return to. If I take leave and occupy the house multiple times throughout the year, and have family watch it. Am I able to qualify under the FHA Good Neighbor Next Door Program? Or is that unlikely? The FHA Good Neighbor Next Door program is described on the FHA official site: “The Good Neighbor Next Door (GNND) sales incentive permits an Owner- Occupant Borrower who is a full-time law enforcement officer, teacher, firefighter, or emergency medical technician who meets HUD requirements to purchase a specifically designated HUD REO Property located in a HUD- designated revitalization area with FHA-insured financing at a | more...

How much can I borrow with an FHA refinance loan?

November 9, 2016

General Income Requirements For FHA Loans

By Joe Wallace

FHA loan rules include specific income requirements for all applicants. That can be an easy statement to misunderstand; FHA loans have no minimum or maximum income limits. Instead, the FHA loan rules state that a borrower’s debt-to-income ratio must be examined (both with and without the monthly mortgage payment factored into the equation) to see whether the borrower can realistically afford the home loan. HUD 4000.1 has the rules for income for “forward mortgages” or new home purchases, and those rules are found on page 186. It begins by defining what the FHA describes as “effective income”: “Effective Income refers to income that may be used to qualify a Borrower for a Mortgage. Effective Income must be reasonably likely to continue through at least the first three years of the | more...

November 9, 2016

FHA Loan Options: What You Should Know

By Joe Wallace

Are you thinking about purchasing a home? Or refinancing your current home loan? FHA mortgage loans and refinance loans offer a variety of options. For new purchases, an FHA mortgage loan allows qualified borrowers to purchase typical suburban homes, but also condo units, town homes, and manufactured homes. Any property that has a permanent foundation or will be affixed to a permanent foundation at closing time may be eligible for an FHA mortgage. (All homes considered for purchase with an FHA loan are subject to an appraisal and must meet basic FHA standards.) Heading 2 For new purchase loans, borrowers can choose a fixed interest rate mortgage or an adjustable rate loan. Borrowers who choose adjustable rate mortgages will be offered an introductory rate, and overall your FICO scores and | more...

November 8, 2016

Divorce and FHA Loan Applications

By Joe Wallace

FICO scores, debt-to-income ratios, and credit history aren’t the only things that can factor in when the lender is gathering data from your FHA mortgage loan application. Borrowers who are divorced may experience additional requests from the lender for paperwork or supporting documentation. We get questions about issues like these quite frequently. Here’s one recent example from the comments section: “Legally divorced in SC for close to seven years. There was no alimony, no children, and bills were split. The underwriters for an FHA re-finance are demanding a copy of the Separate Maintenance and Property agreement filed at the time of separation, a full year and a half before the divorce. I dont have a copy of it, so I have to either buy one online or miss a days | more...

November 8, 2016

HUD Adds Relief For Hurricane Matthew Victims In Virginia

By Joe Wallace

Last month, we reported on a HUD press release announcing relief for victims of Hurricane Matthew. That relief was offered in four states; North and South Carolina, Florida, and Georgia. Now, HUD has announced the same kind of relief for those who live in Virginia and are dealing with the aftermath of Hurricane Matthew. According to the HUD press release, “The U.S. Department of Housing and Urban Development announced today it will speed federal disaster assistance to the Commonwealth of Virginia and provide support to homeowners and low-income renters forced from their homes due to Hurricane Matthew.” The release adds, “President Obama issued a disaster declaration for the cities of Chesapeake, Newport News, Norfolk, and Virginia Beach. The President’s declaration allows HUD to offer foreclosure relief and other assistance to | more...

November 7, 2016

HUD Announces Settlement In Illinois Fair Housing Case

By Joe Wallace

A press release on the HUD official site announces that the U.S. Department of Housing and Urban Development has reached an agreement between the East Chicago Housing Authority and a fair housing organization, “resolving multiple complaints of housing discrimination” according to the press release. Acting on behalf residents in the area, the Sargent Shriver National Center on Poverty Law alleged the East Chicago Housing Authority violated the Fair Housing Act, Title VI of the Civil Rights Act of 1964, and Section 504 of the Rehabilitation Act, “with respect to the relocation of residents at West Calumet Housing Complex due to soil surrounding the complex being contaminated with lead and arsenic.” The HUD press release states that, according to the complaint, “the housing authority engaged in discriminatory housing practices in its | more...

November 7, 2016

Mortgage Rate Trends: Improving Slightly

By Joe Wallace

Mortgage loan interest rates are not directly tied to things like scheduled economic data releases. Friday’s job report, for example, is not directly associated with rate movements, but investor reaction to such reports can and often does influence mortgage rates. The usual rule of thumb is, in general, what is bad for the economy often benefits interest rates. So when you get good news (or at least, better news) in a job report, you could reasonably expect conditions to be favorable to higher mortgage rates assuming you use that rule of thumb. But sometimes that rule won’t apply for one reason or another, and that was the case on Friday when mortgage rates improved slightly even though the jobs data was stronger than some thought it might be. In this | more...

Buying A Fixer-Upper With An FHA 203(k) Rehab Loan

November 4, 2016

High Voltage Lines and FHA Loans

By Joe Wallace

A reader asked a question recently about high voltage transmission lines and the FHA loan rules that address them in relation to the property to be purchased with an FHA mortgage. “I am looking to find info regarding High Voltage Transmission Lines. I know that in 4150.2 that it clearly states that the dwelling or other improvements can not be within the fall zone. However I am not locating this info in more updated references. Can you help with me finding this info?” FHA loan rules were updated in HUD 4000.1, and have since replaced many older references. According to the FHA/HUD official site, “The Federal Housing Administrations (FHA) Single Family Housing Policy Handbook 4000.1 (SF Handbook) is a consolidated, consistent, and comprehensive source of FHA Single Family Housing policy”. | more...

November 3, 2016

Septic Systems And FHA Loans: A Reader Question

By Joe Wallace

A reader got in touch recently to ask about FHA home loan rules on septic systems. “FHA loans require 50 to 75 feet min for well and septic to be from each other, is that true? And is there anyway round that being there is going to be putting in city water and sewer in the next 2 years…” FHA requirements governing septic systems can be found in several places in HUD 4000.1, including a requirement for FHA appraisers to be familiar with minimum distance requirements for septic and well placement. Wells and well water quality are very important factors where applicable. HUD 4000.1 states, “The Appraiser must note any readily observable deficiencies regarding the well and require test or inspection if any of the following apply: the water supply | more...

November 3, 2016

Mortgage Rates: Slightly Better

By Joe Wallace

Mortgage loan rates recovered a bit on Wednesday, making nearly a full week of either no upward movement or slight recovery on a daily basis. Borrowers affected by these four days will likely have noticed the differences in closing costs rather than adjustments in rates. There was some attention paid to Wednesday’s Fed announcement, since past versions of this have either moved or had serious potential to move mortgage loan rates based on investor reaction to the contents of such announcements. But this time around, there was nothing noticeable; the markets seem more interested in the uncertainty surrounding political events at the moment. 30-year fixed rate conventional mortgages are still at or near 3.625% best execution. FHA mortgage rate conditions haven’t altered either, holding steady in the comfort zone range | more...