Articles Published in: 2017

August 22, 2017

HUD Announces Disaster Relief For West Virginia

The Department of Housing and Urban Development (HUD) has announced disaster relief for storm victims in West Virginia, thanks to a federal disaster area declaration for Harrison, Marion, Marshall, and Wetzel counties. According to a press release on the FHA/HUD official site, the agency will “speed federal disaster assistance to the State of West Virginia and provide support to homeowners and low-income renters forced from their homes due to severe storms, flooding, landslides, and mudslides” in zones now declared federal disaster areas. The FHA/HUD disaster relief measures include a 90-day moratorium requested by HUD on all FHA loans in the affected areas, and also the availability of FHA 203(h) rehab loans intended for “disaster victims who have lost their homes and are facing the daunting task of rebuilding or buying | more...

Should I Consider An FHA Reverse Mortgage?

August 21, 2017

Does The FHA Appraiser Work For The Lender?

By Bruce Reichstein

Does the FHA appraiser work for the lender? That’s what one reader wanted to know this week, writing us to ask: “I read your article about how an FHA appraiser is chosen by a lender but my question is: Is the FHA appraiser an ‘agent’ of the lending company? The reason I ask is two years ago I purchased my first home with an FHA loan. Two weeks after closing my roof leaked. It turns out our house has five layers of roofing on it which is visible to the naked eye from the ground because we have no gutters on the home.” “When I called the FHA resource line I was finally told that the appraiser and his report falls back on the lending company…So now I am wondering | more...

August 21, 2017

Are FHA Appraisals The Same As Home Inspections?

By Joe Wallace

Are FHA appraisals the same thing as home inspections? We’ve fielded a few reader questions this week about this issue, and it is very important for borrowers to fully understand why they should budget and save for the optional home inspection in addition to an FHA appraisal (which is not optional). FHA appraisals are NOT the same as home inspections. Appraisers and home inspectors will approach the same property with different intentions and procedures. The FHA appraisal will never give a borrower an informed look at the home the way the home inspection is designed to; the shortest way to address this issue is to state that appraisals are for lenders, home inspections are for borrowers. Even if a property makes it all the way through the appraisal process with | more...

August 18, 2017

Can My Seller Pay Some Of My Closing Costs?

By Bruce Reichstein

Can my seller pay some of my closing costs? The basic answer is, “yes, within certain limits.” FHA loan rules permit certain expenses to be negotiated between buyer and seller, including the contribution of allowed costs. How does it work? FHA Loan Rules For Interested Party Contributions HUD 4000.1, the FHA loan handbook, defines “interested parties” as “sellers, real estate agents, builders, developers or other parties with an interest in the transaction”. HUD 4000.1 states that such interested parties are permitted to offer payments on “origination fees, other closing costs and discount points” within the bounds of FHA loan rules (more on that below), state law, and lender standards. What Payments Can An Interested Party Contribute? HUD 4000.1, page 232, states that an interested party or parties may contribute towards | more...

FHA Loan Rules: Using Rental Income to Qualify for a Mortgage Loan

August 17, 2017

What Kind Of Home Can I Buy With An FHA Mortgage?

By Joe Wallace

What kind of home can you buy with an FHA mortgage? The answer isn’t what some people expect, likely due to a misunderstanding of the FHA loan program, who it is intended for, and why it exists. A good example of this? The assumption that FHA mortgages are primarily for first-time home buyers or the economically disadvantaged. Such assumptions are not true. FHA loans are for any financially qualified applicant, which means you don’t have an income threshold to meet, there are no restrictions on those who have purchased homes before, and there is no income maximum. What kind of home can you purchase with an FHA mortgage? FHA loans permit the purchase of homes which are primarily residential, have no restrictions of resale, and which meet FHA minimum standards | more...

August 17, 2017

What Kind Of FHA Loans Are Available?

By Bruce Reichstein

What kind of FHA loans are available? This is an important question because it’s good to know what is not possible with an FHA mortgage as well as the options available to you. For example, some ask if an FHA loan can be used like a personal loan-is it possible to buy a home with an FHA mortgage but apply for more money than you need to complete the transaction? The answer in this case would be no, because FHA loan rules do not permit cash back to the borrower in that way at closing time, refunds excepted. So what can you do with an FHA mortgage loan? FHA Loans For Single Family Residences FHA home loans are intended for owner-occupiers. That means if you buy a property with an | more...

August 16, 2017

What Does My FHA Lender Look For In My Credit Report?

By Joe Wallace

What does my FHA lender look for in my credit report? That is a very good question to ask, and the earlier in the home loan planning stages you ask, the better off you’ll be. It’s highly recommended that home loan borrowers get copies of their credit reports in the year leading up to a home loan application. You want to know what your credit history says about you before you submit that information to your loan officer. FHA Loan Rules For Credit Reports Your lender is required by the FHA loan program to pull your credit reports, and to use “traditional” credit reporting wherever available. Some borrowers do not have credit, or have non-traditional credit histories. According to the FHA loan handbook, HUD 4000.1, the lender is required to | more...

Getting An FHA Mortgage After Bankruptcy

August 16, 2017

Is My Credit Good Enough For An FHA Home Loan?

By Bruce Reichstein

Is my credit good enough for an FHA home loan? Borrowers need to know what FHA loan minimum credit standards are, but they will also need to find out what their participating lender’s credit requirements are above and beyond FHA loan minimums. FHA Minimum Standards For FICO Scores The FHA loan handbook, HUD 4000.1, lists the criteria the FHA requires to qualify for a home loan. For most FHA mortgage loans, borrowers who have FICO scores of 580 or higher qualify for maximum financing with the lowest down payment possible (3.5% of the adjusted value of the home or the purchase price, whichever is lower). Borrowers with FICO scores between 500 and 579 may technically qualify for an FHA mortgage, but with a minimum 10% down. Borrowers with FICO scores | more...

August 15, 2017

Can I Get A Second FHA Appraisal?

By Joe Wallace

Can I get a second FHA appraisal? There are a few reasons why a borrow might feel motivated to ask that question, but in many cases it could be due to a disagreement about the outcome of the original FHA appraisal. Ordering A Second FHA Appraisal FHA loan rules in HUD 4000.1, the FHA single-family home loan handbook, clearly state the FHA’s position on ordering second appraisals due to a dispute over the outcome. “The Mortgagee is prohibited from ordering an additional appraisal to achieve an increase in value for the Property and/or the elimination or reduction of deficiencies and/or repairs required.” That is simple enough. However, there may be situations where one party to the loan feels that the appraisal was not done competently or that the appraisal is | more...

August 15, 2017

What Should I Know About FHA Appraisals?

By Bruce Reichstein

What should I know about FHA appraisals? There are many factors to remember about the FHA appraisal process, and not all of them have to do with the act of doing the appraisal; borrowers need to know how the appraisal fits into the overall process of applying for an FHA loan and getting loan approval. FHA Appraisals Are A Typical Expense The appraisal fee is a standard part of a home loan’s fees and expenses, and borrowers should save money for both the appraisal and the possibility of additional fees that could be required depending on the outcome (more on that issue below). Borrowers should keep in mind that the home loan cannot be approved without the results of the appraisal, so it’s best to come to the loan process | more...