Articles Published in: 2016

October 25, 2016

FHA Loan Assumptions: A Reader Question

A reader got in touch with us recently via our comments section, with a question about FHA loan assumptions. She asked, “Are FHA refinance mortgages assumable?” This is an interesting take on the loan assumption question, since many of our prior questions in the comments section are asking if FHA loan assumptions are possible in a general sense. The specific query about refinanced loans is one we haven’t seen in recent months, but FHA loan rules in HUD 4000.1 are quite specific: “All FHA-insured Mortgages are assumable.” That is found on page 691 of HUD 4000.1, which also adds, “The Mortgagee must not impose, agree to, or enforce legal restrictions on conveyances or assumptions after closing except when: -specifically permitted by HUD regulations; or -the restriction had been specified in | more...

October 25, 2016

Interest Rate Trends: Higher

By Joe Wallace

We’ve watched an overall upward trend in interest rate behavior for mortgages in recent weeks, and while there have been some days of recovery, it seems that at present there are a variety of factors putting upward pressure on rates. Market watchers have been using the phrase “the trend is not your friend” for a while now, and Monday’s rate movement showed no signs of proving that phrase wrong in the short term. Rates moved higher on Monday, not enough to push actual numbers up, but enough so that affected borrowers may notice a difference in closing costs. 30-year fixed rate conventional mortgages are still being reported at or near 3.625% (best execution), and the FHA mortgage loan interest rate range between 3.25% and 3.5% is still there (again, best | more...

FHA Loans And Natural Disasters: What You Should Know

October 24, 2016

Mold Standards: An FHA Loan Question

By Joe Wallace

A reader asks, “Does the EPA or the FHA have the responsibility for setting the TLVs for mold spores in the air? What if the mold count is higher outside than inside?” The FHA does not set or regulate such health issues, deferring instead to federal, state, or local authority where applicable. According to the Environmental Protection Agency’s official site, we learn the following about mold as it relates to exposure in buildings (in general): “Is sampling for mold needed? In most cases, if visible mold growth is present, sampling is unnecessary. Since no EPA or other federal limits have been set for mold or mold spores, sampling cannot be used to check a building’s compliance with federal mold standards. Surface sampling may be useful to determine if an area | more...

October 24, 2016

Appraisal Rules For FHA Mortgages, Reverse Mortgages

By Joe Wallace

FHA home loans require an appraisal, which is designed to determine the fair market value of the home, but also to insure the property meets FHA minimum standards. While the appraisal must not be considered an inspection (and passing the appraisal is not a stamp of FHA approval or a guarantee that a home is free of problems), the FHA appraiser is required to report problem conditions may be spotted during the process. What does this mean? HUD 4000.1 states, “The Appraiser must report known environmental and safety hazards and adverse conditions that may affect the health and safety of the occupants, the ability of the property to serve as collateral, and the structural soundness of the improvements.” This is found on page 491, which also adds the following description/definition | more...

October 21, 2016

Mortgage Rate Trends: Recovering

By Joe Wallace

Mortgage rate watchers were paying close attention on Thursday to see what the European Central Bank (ECB) might announce that could influence investor behavior in markets affecting mortgage interest rates. Fears of higher rates on Thursday were out to rest (for now) thanks to the ECB’s lack of movement on tapering off the European version of quantitative easing or QE. Our sources point to this as a big reason Thursday could have been another “spoiler” day for rates in the short term. To be sure, the ECB isn’t the only thing that has the potential to affect rates, but it was the biggest thing to watch on Thursday. QE and the Fed’s handling of it was responsible for influencing many ups and downs in the U.S. a few years ago. | more...

October 20, 2016

FHA Refinance Loans: 10 Things To Know

By Joe Wallace

If you are considering your options with an FHA refinance loan, here are ten tips to help you decide which type of refinancing is right for you. FHA Refinancing For Non-FHA Loans Borrowers do not have to be in an FHA mortgage loan already to be eligible for certain types of FHA refinance loans. Your VA loan, conventional, even sub-prime mortgages may be able to be refinanced into an FHA loan. FHA refinance loans feature cash-out and non-cash out options for existing FHA and non-FHA mortgages. Refinancing And Repairs Your FHA refinance loan options include rehab/repair loans under the 203 program. FHA 203(k) and 203(h) mortgages have long been a part of the FHA loan options available from participating lenders. If your home has been damaged in a natural disaster, | more...

October 20, 2016

FHA Requirements, Occupancy, and Business Loans

By Bruce Reichstein

Here’s an example of a question we get fairly often about the intended purposes of FHA mortgages: “I am interested in investing in properties I intend to flip and rent out. I already own a primary residence, can I use a FHA loan to buy a second home for business? FHA loan rules are specific when it comes to flipping a home, starting with the FHA’s definition of the practice as found in HUD 4000.1: “Property Flipping is indicative of a practice whereby recently acquired Property is resold for a considerable profit with an artificially inflated value, often abetted by a Mortgagees collusion with an Appraiser…Property Flipping refers to the purchase and subsequent resale of a Property in a short period of time..” We are not implying that the reader | more...

October 19, 2016

Mortgage Payments On FHA Loans: How Much?

By Joe Wallace

One of the most common questions about FHA mortgage payments is naturally, “How much will I have to pay?” And the answer is not as easy as you might think since there are a variety of factors that go into calculating the monthly mortgage payment. FHA loan limits, the amount of the loan the FHA will insure, don’t include the Up Front Mortgage Insurance Premium (UFMIP), for example. So you can’t simply divide the amount of your loan limit and divide by the number of mortgage payments you plan to make. In addition to UFMIP, there are other things to consider. For example, is the borrower planning on an FHA Energy Efficient Mortgage (EEM)? This option allows the addition of extra funds for approved upgrades or improvements to the home, | more...

October 19, 2016

Mortgage Interest Rates Recover Slightly

By Joe Wallace

Interest rates for mortgage loans improved in a small way for the second day after a prolonged “losing streak” that managed to push conventional loans out of a a previous range and into a single, higher number and FHA mortgage loan interest rates out of their single-number best execution territory. 30-year fixed rate conventional mortgages are, best execution, at or near 3.625%, with their previous range being (depending on the lender) between 3.5% and 3.625%. FHA mortgage loan rates are now in a range between 3.25% and 3.5% best execution at the time of this writing. Best execution rates listed here assume ideal conditions including an extremely well-qualified borrower with outstanding FICO scores and loan repayment/credit history. Your experience may vary, and best execution rates are not available to all | more...

October 18, 2016

Appraisals: FHA Loans and MPR Rules

By Joe Wallace

We get many questions about FHA appraisals, and there are some critical issues to keep in mind when considering this mandatory part of the FHA loan process. A home to be purchased with an FHA mortgage loan must pass an FHA appraisal, which is intended strictly to assess the fair market value of the home and insure the property meets FHA minimum standards. Note the use of the use of the word, “minimum”. Appraisals are NOT intended as INSPECTIONS of the property. A home that passes an FHA appraisal is not guaranteed to be free of problems, and the FHA makes it clear that borrowers should not accept the appraisal as any sort of stamp of FHA approval. In all cases, a borrower purchasing a home with an FHA mortgage | more...