Articles Published in: 2017

Get A Free Credit Report Before Applying For An FHA Loan

August 14, 2017

Where Can I Get An FHA Loan?

Where can I get an FHA loan? There are plenty of options when you are ready to begin your journey to become a home owner-you can apply in person, or get pre-qualified or apply online. How does it all work? Who Offers FHA Home Loans? FHA mortgages are offered by participating lenders who have been approved by the FHA to offer FHA mortgages, refinance loans, FHA Reverse Mortgages, and rehab loans. The FHA itself does not loan the money for you to purchase your home. The FHA may require the lender, depending on circumstances, to work with the FHA to approve certain home loans, but many FHA lenders have earned the right to offer loans “unsupervised”, meaning they have met standards that permit them to make decisions on loan approval | more...

August 11, 2017

FHA Mortgage Questions: What Is Undisclosed Debt?

By Joe Wallace

What is undisclosed debt and how can it affect your FHA home loan application? Undisclosed debt is basically credit information that is either not listed by the borrower on the credit application, or debt that does not show up yet on a credit report. There are several reasons why a lender would be concerned by undisclosed debt and FHA loan rules anticipate situations where such problems occur. Undisclosed Non-Mortgage Debt FHA loan rules for this type of debt which is not volunteered by the borrower on a mortgage application (or does not show up on the borrower’s credit report) are found on page 187 of the FHA loan handbook, HUD 4000.1. There we find these instructions to the lender: “When a debt or obligation (other than a Mortgage) not listed | more...

August 10, 2017

FHA 203(k) Fixer-Upper Loans: What About The Appraisal?

By Bruce Reichstein

When you buy a home with an FHA mortgage, it must be appraised to insure the property meets minimum FHA standards. A home to be purchased with an FHA mortgage must be code-compliant, it must not be too close to high voltage lines or high pressure gas pipelines, and there are specific requirements for property located near know natural disaster zones. All of these requirements protect buyers and lenders alike, but there are certain instances where a property would never pass the FHA appraisal, yet borrowers seek mortgage loans for these properties anyway. Consider the borrower who needs a home loan to do rehab or repair work on an existing structure that badly needs it. And what about the borrower who wants to purchase a fixer-upper home, or a property | more...

August 10, 2017

What Is An FHA Appraisal?

By Joe Wallace

What is an FHA appraisal? It’s one of the most important parts of your home loan process when purchasing property with an FHA mortgage. The appraisal is a mandatory review of the property to help the lender establish the fair market value of the home while making sure the property meets minimum FHA requirements. But there’s more to the appraisal, as we’ll learn. The FHA Appraisal Is A Tool For Your Loan Officer Appraisals are not intended to help or inform the buyer as to the condition of the property. Some mistake the FHA appraisal for a home inspection, assuming that the FHA will “approve” or “reject” a home based on its’ condition. The appraisal process is NOT a home inspection. Borrowers who choose not to pay for a home | more...

August 9, 2017

What Can I Add To My FHA Mortgage Loan?

By Bruce Reichstein

What can I add to my FHA mortgage loan? There’s a list of items that may be allowed to be added to your mortgage loan above and beyond the adjusted value of your property. Let’s examine what the FHA loan handbook, HUD 4000.1, has to say about adding certain costs to your home loan amount. Calculating The Maximum Mortgage Amount On Your FHA Loan To start, let’s see what HUD 4000.1 says about how the lender is expected to calculate the maximum mortgage amount. “The maximum mortgage amount that FHA will insure on a specific purchase is calculated by multiplying the appropriate LTV percentage by the Adjusted Value. In order for FHA to insure this maximum mortgage amount, the Borrower must make a Minimum Required Investment (MRI) of at least | more...

August 9, 2017

How Much Can I Borrow With An FHA Refinance Loan?

By Joe Wallace

How much can I borrow with an FHA refinance loan? There are many reasons why a borrower might need to know early in the planning stages how much might be allowed, and knowing the FHA loan rules in this area can definitely help save time before you apply for the loan. Knowing what kind of refinance loan you might need is a big help in answering the question. Why? Because the actual dollar amount for some FHA refi loans may vary for the same property depending on circumstances. The amount of an FHA rehab loan, for example, will be higher since there are laborers and materials to be paid for, inspections, etc. The same home that gets an FHA Streamline Refinance loan instead might have a lower dollar amount depending | more...

August 8, 2017

How Soon Can I Sell My Home? FHA Loan Rules Part Two

By Bruce Reichstein

How soon can I sell my home? In our previous blog post on this subject, we examined the FHA loan handbook, HUD 4000.1, and what it has to say about how quickly you can sell a property purchased with an FHA mortgage once the loan has closed. In general, FHA loan rules don’t have much to say about what the owner of record does with the property (with regard to selling it) once it has been purchased and occupied as per FHA loan requirements. The spirit of the FHA loan rules seems to be that the owner should be free to sell without restriction. But FHA loan rules do have something to say about buying a home shortly after it has been purchased from another. There are restrictions on “flipping”, | more...

Refinancing a Second Home With An FHA Mortgage Loan

August 8, 2017

How Soon Can I Sell My Home After My FHA Loan Closes?

By Joe Wallace

How soon can a borrower sell the home purchased with an FHA mortgage loan? The answer depends greatly on circumstances, but there are a few things to keep in mind. FHA home loans are intended for owner-occupiers, not investment property, so borrowers will need to keep that in mind when learning about the requirements and restrictions on an FHA mortgage in this area. In general, the FHA loan rules in this area are directed at the buyer’s side of the transaction. Owners are not prevented from offering property for sale, and FHA loan rules generally favor a home owner’s ability to freely sell property without restriction. But if you want to sell your property to someone looking to buy with certain types of mortgage loans backed by the government (like | more...

August 7, 2017

Which Credit Score Will My Lender Use For My Home Loan?

By Bruce Reichstein

Which credit score will my lender use for my home loan? There is understandably some confusion over this issue; there are three major credit reporting agencies, and multiple credit scores possible. How does your lender know which score(s) to use? When it comes to FHA mortgage loans, the FHA loan handbook has instructions for the lender on how to proceed when evaluating a borrower’s credit scores. One page 132 we learn: “The Minimum Decision Credit Score (MDCS) refers to the credit score reported on the Borrower’s credit report when all reported scores are the same. Where three differing scores are reported, the middle score is the MDCS. Where two differing scores are reported, the MDCS is the lowest score. Where only one score is reported, that score is the MDCS.” | more...

Are You In Trouble On Your FHA Mortgage Loan?

August 7, 2017

What Are The Differences Between FHA Mortgages And Conventional Loans?

By Joe Wallace

What are the differences between FHA loans and conventional mortgages? That’s a very good question, and one that has a multi-faceted answer. Borrowers could find that with careful planning, the amount of mortgage debt with an FHA mortgage is lower than with some conventional equivalents. The most basic difference between FHA mortgages and conventional home loans is that conventional loans are not backed in any way by the United States government, while FHA loans are guaranteed with government funds. This makes FHA loans easier to get since there is less risk to the lender. FHA loans differ from conventional loans in a variety of other ways, as we’ll examine here. Lower Interest Rates Interest rates on FHA mortgage loans are lower than conventional mortgages. You can easily verify this by | more...