Articles Published in: 2017

July 26, 2017

What Is An FHA Loan Modification?

What Is An FHA Loan Modification? According to the FHA loan handbook, HUD 4000.1, such modifications are part of a loss-mitigation program from the FHA and HUD designed to help FHA borrowers avoid foreclosure and keep their homes. HUD 4000.1 states that FHA loan modification is available through a program called FHA-HAMP, or the FHA Home Affordable Modification Program. “The use of an FHA-HAMP Option is to both alleviate the Borrower’s burden of immediate repayment of arrears and to adjust monthly payments to a level sustainable by the household’s current income. The FHA-HAMP Option may or may not include a Partial Claim.” A “partial claim” is defined in the FHA loan rules as follows: “The total amount available is the lesser of: (1) the unpaid principal balance as of the | more...

July 26, 2017

What Am I Allowed To Rehab With An FHA 203(k) Mortgage?

By Bruce Reichstein

In our last blog post, we discussed what is permitted under the FHA 203(k) rehab mortgage loan. Borrowers are allowed to apply for a new purchase loan or an FHA refinance loan under the 203(k) program, which the FHA loan handbook describes as being used to do the following: – rehabilitate an existing one- to four-unit Structure, which will be used primarily for residential purposes; – rehabilitate such a Structure and refinance outstanding indebtedness on the Structure and the Real Property on which the Structure is located; or – purchase and rehabilitate a Structure and purchase the Real Property on which the Structure is located. According to HUD 4000.1, “Structure” is defined as, “a building that has a roof and walls, and stands permanently in one place that contains single | more...

July 25, 2017

What Can I Improve With An FHA 203(k) Mortgage?

By Bruce Reichstein

An FHA 203(k) mortgage is basically a rehab loan, which can be used as a new purchase loan or a refinance loan for the purpose of repairing/rehabbing an eligible property. The FHA single family home loan handbook, HUD 4000.1, has a list of requirements and guidelines for FHA 203(k) loans, which includes a set of allowable improvements as well as a list of things FHA loan money cannot be used for. Let’s examine what is permitted with an FHA 203(k) loan first. Borrowers who are approved for an FHA rehab loan may use the loan for any of the following projects acceptable to the lender: – costs of construction, repairs and rehabilitation; – architectural/engineering professional fees; – the 203(k) Consultant fee subject to the limits in the 203(k) Consultant Fee | more...

Time Is Running Out On Exterior-Only FHA Appraisals

July 24, 2017

Where Can I Refinance An FHA Loan? Part Two

By Bruce Reichstein

Where can I refinance an FHA loan? We’ve been exploring FHA refinance topics in recent blog posts, and this common question is definitely an important one. Why? Because depending on your refinance needs, you may need to shop around for a lender who will offer the type of loan best for your financial goals and needs. FHA refinance loans for existing FHA mortgages are sometimes referred to as “FHA-to-FHA refinancing”, which simply means that you’re going from one FHA loan to another. One misconception about refinance loans is that you would need to stay with the original lender in order to refi FHA-to-FHA, but this is not true. You are free to shop around for a new participating FHA lender to refinance your mortgage. You are also free to explore | more...

July 24, 2017

Where Can I Refinance An FHA Loan?

By Joe Wallace

Where can I refinance an FHA loan? Many want to know what their FHA refinance options are, but there are some misconceptions about refinancing that should be cleared up so borrowers understand all their options and not just the most obvious choices. For example, did you know you can refinance an FHA mortgage loan without an FHA-required credit check? (More information on that transaction is below.) The most basic answer to the question is that you may refinance an FHA mortgage at any participating FHA lender who offers the type of refinancing you seek, and your options may include loans that feature cash back, those which have no cash back permitted but allow a no-credit-check transaction, etc. But there’s more to this issue than just who and where you choose | more...

July 21, 2017

What Is An FHA Loan?

By Bruce Reichstein

What is an FHA loan? Simply put, an FHA loan is a kind of home loan that is guaranteed by the FHA and issued by a participating lender. Only FHA-approved participating lenders may offer FHA home loans, and the FHA itself does not lend money to home loan applicants. What The FHA Loan Program Can Do For You FHA loans can help you purchase a new home. These homes can be already built, but qualified borrowers also have the option to apply for FHA loans to pay for a home to be constructed from the ground up. Such loans are generally for what is known in the industry as “stick built” housing, which means a home that is constructed on-site rather than a manufactured home which is shipped in sections | more...

July 20, 2017

What Is An FHA Streamline Refinance Loan? Part Two

By Joe Wallace

We have been discussing the question, “What is an FHA Streamline Refinance loan?” In our previous blog post on this subject we discussed what FHA Streamline Refinance loans are, including the fact that they are intended only for FHA-to-FHA transactions only, and have no FHA-required credit check. FHA Streamline refinance loans also generally require the borrower to get a lower payment, lower interest rate, or get into a fixed rate loan from an adjustable rate mortgage. There are some exceptions to this which you can discuss with your lender. Those are some of the basics about what FHA Streamline refi loans are. But there is also a list of things that streamline refinances are NOT. These loans don’t permit the same things that FHA cash-out refinance loans do. FHA Streamline | more...

July 20, 2017

What Is An FHA Streamline Refinance Loan?

By Bruce Reichstein

What is an FHA streamline refinance loan? This type of refinance loan option is intended for borrowers who have existing FHA mortgages and want to refinance into a lower interest rate or monthly payment. Streamline refinance loans allow the borrower to apply with no FHA-required appraisal or credit check. Your lender may require one or both, but the FHA allows the option to apply without such requirements. That’s a unique feature-FHA streamline refi loans allow the lender to use the borrower’s existing credit and appraisal data to approve the loan. This type of borrowing can be a major advantage for the home owner who has financial goals that include lower monthly payments. How Streamline Refinance Loans Work The FHA loan handbook, HUD 4000.1, describes streamline refinancing as follows: “Streamline Refinance | more...

July 19, 2017

Who Can Refinance An FHA Loan? Requirements You Should Know

By Joe Wallace

Who Can Refinance An FHA Loan? We’ve been examining that question recently and according to HUD 4000.1, the FHA loan handbook, at least one borrower on the FHA refinance loan transaction must have legal title to the property. Under a section titled, “Borrower Eligibility”, we learn: “At least one Borrower on the refinancing Mortgage must hold title to the Property being refinanced prior to case number assignment.” But there is also, depending on the nature of the home to be refinanced, a requirement on the property type itself. HUD 4000.1 states: “For a transaction involving a Manufactured Home to be considered a refinance, the Manufactured Home must have been permanently erected on a site for more than twelve months prior to case number assignment.” What are some other FHA refinance | more...

July 19, 2017

Who Can Refinance An FHA Loan?

By Bruce Reichstein

Who can refinance an FHA loan? There are rules and requirements for refinancing an FHA mortgage loan that include prohibitions to ensure fair lending, but also restrictions on who may refinance depending on the status of the applicant as a borrower or co-borrower on the original loan. The rules that govern who can refinance an FHA loan, and how it may be done, are found in the FHA handbook, HUD 4000.1. There, we learn: “A party who has a financial interest in the mortgage transaction, such as the seller, builder or real estate agent, may not be a co-Borrower or a Cosigner. Exceptions may be granted when the party with the financial interest is a Family Member.” Furthermore: “To be eligible, all occupying and non-occupying Borrowers and co-Borrowers must take | more...