Articles Published in: February 2018

February 28, 2018

Know Your FHA Loan Options

Do you know your FHA home loan options? There are many things you can do with an FHA mortgage and buying a new home is just one of them. You can use an FHA home loan to buy, refinance, rehab, or upgrade a principal residence, with lower down payments and protections for the borrower when paying off early. FHA New Home Loans Did you know you can use an FHA mortgage to buy an existing home or have one built for you from the ground up? Buying an existing property is one of the most common uses of an FHA mortgage, but you can apply for an FHA One-Time Close Construction Loan (also known as an FHA Construction-To-Permanent loan) using an approved builder to have a house built brand new. | more...

Rent Or Buy? Arguments For Purchasing A Home With An FHA Mortgage

February 27, 2018

FHA Home Loan Down Payment Rules You Should Know

By Joe Wallace

FHA home loan down payment rules you should know include the minimum amount down, acceptable sources of down payment funds, and how other closing costs and associated expenses related to your down payment requirements. Do you know how your chosen FHA lender will calculate your down payment? Knowing before you apply can help plan and save for this and other required closing costs. FHA Loan Down Payments: A Minimum Required Investment FHA loan rules in HUD 4000.1 refer to the down payment as a minimum required investment (also referred to as an MRI for short), not to be confused with the borrower’s Total Required Investment, described in HUD 4000.1 as: “Total Required Investment refers to the amount the Borrower must contribute to the transaction including the Borrower’s downpayment and the | more...

February 26, 2018

FHA Loans, Credit Reports, And Loan Approval

By Bruce Reichstein

What do you need to know about FHA loans, credit reports, and loan approval? To begin, your credit reports have a big part to play in the lender’s decision to approve your mortgage application. What do you need to know about this approval process and what the lender is looking for? Home Loans Require More Than Good Credit Scores FHA loans, like any other major line of credit, require the lender to determine that the applicant is a good risk for the loan. Your FICO scores may be well within the range the lender needs to approve your loan with maximum financing (that score may vary depending on the lender) but what ELSE does your credit report say? For example, are you carrying the maximum or close to the maximum | more...

February 23, 2018

FHA Announces Foreclosure Avoidance Help For Federal Disaster Areas

By Joe Wallace

The FHA has announced extended foreclosure relief measures for those in qualifying federal disaster areas. According to a press release on the FHA official site, new guidance for participating FHA lenders will apply for those affected by a wide range of natural disasters including: Louisiana (Hurricane Harvey) DR-4345 Texas (Hurricane Harvey) DR-4332 Florida (Hurricane Irma) DR-4337 Georgia (Hurricane Irma) DR-4338 Puerto Rico (Hurricane Irma) DR-4336 South Carolina (Hurricane Irma) DR-4346 Virgin Islands (Hurricane Irma) DR-4335 Puerto Rico (Hurricane Maria) DR-4339 Virgin Islands (Hurricane Maria) DR-4340 California (Wildfires) DR-4344 or California (Wildfires, Flooding, Mud Flows, Debris Flows) FEMA-DR-4353 There is a lengthy description of some of the new program changes (which we will cover in another blog post) but one of the most important developments included in the FHA announcement has | more...

February 22, 2018

FHA Loan Credit Requirements And Your Credit Scores

By Joe Wallace

FHA loan credit requirements state that the lender must pull your credit information and credit scores to review a borrower’s credit worthiness. But if you are applying for an FHA loan you likely have three credit scores the lender must contend with. Borrowers often want to know how the lender views these three scores-they can be different from one another depending on circumstances-and which of multiple credit scores is actually used to process your home loan. The rules for FHA credit score requirements are found in HUD 4000.1, the FHA loan handbook. Credit scores must come directly from the three credit reporting agencies and cannot be submitted or transmitted to the borrower or another third party then submitted to the lender. Your credit scores must come from the source. FHA | more...

February 21, 2018

FHA Mortgage Loans: Credit History Counts

By Joe Wallace

When it comes to FHA mortgage loans, or any major line of credit, your credit history counts. Some might focus on the FICO score, but the numbers you get off your credit report are not the only credit qualifications needed to successfully apply for an FHA mortgage. Credit Report Data: The Big Three Many people use the phrase “Big Three” to refer to the three credit reporting agencies themselves; Equifax, Experian, and TransUnion. But here, we’re referring to the Big Three on your credit report itself. Your credit score, credit history, and the amount of credit you carry. The Big Three credit factors all count towards your potential loan approval or denial. Why? The lender is required to establish that you are a good credit risk for the loan. Your | more...

February 20, 2018

Should I Refinance With An FHA Mortgage?

By Bruce Reichstein

Should I refinance with an FHA mortgage? There are many reasons why you might want to consider refinancing, especially if you are looking for a more competitive interest rate or need to move into a fixed rate loan instead of continuing with an adjustable rate mortgage. I Want To Get A Different Interest Rate Typically, on paper FHA mortgage loans do offer more competitive interest rate and it is possible for borrowers to get access to better rates with an FHA loan. But there is a very important factor here to consider-your credit history and FICO score may dictate your access to the most competitive rates. If you have excellent credit, your chances of a more competitive rate are better. If you have lower FICO scores or represent an increased | more...

February 20, 2018

HUD Announces Resolution In California Fair Housing Case

By Joe Wallace

The Department of Housing and Urban Development has announced the resolution of a California Fair Housing Act discrimination case. According to a press release at the HUD official site, the agency has reached an agreement with the Housing Authority of the County of Contra Costa (HACCC) and the Vallejo Housing Authority (VHA), “resolving allegations that they violated the Fair Housing Act, Section 504 of the Rehabilitation Act of 1973, and the Americans with Disabilities Act when they allegedly denied a request by a resident with disabilities to extend her search time to find suitable housing that would accept her Housing Choice Voucher”. Fair Housing Act laws make it illegal to discriminate against those buying or renting a home by “denying or limiting housing to persons with disabilities, or discriminating in | more...

February 19, 2018

Happy Presidents’ Day 2018

By Bruce Reichstein

Happy Presidents’ Day 2018! Today banks and markets are closed, and we pause from our usual schedule of writing posts and answering questions about FHA home loans to observe the holiday. We return with our regular content schedule tomorrow. Thank you very much for reading!

February 16, 2018

FHA 203(k) Rehab Mortgages: Who Does The Rehab Work?

By Joe Wallace

When it comes to FHA 203(k) rehab loans, many borrowers want to know who does the work? Can the borrower hire a contractor, is the borrower required to do the work themselves? What are the rules? The guidelines for the FHA 203(k) rehab loan program are found in HUD 4000.1, which states that certain standards are in place when trying to select the contractors to do the labor. For starters, this type of loan requires that the borrower use the services of a 203(k) loan consultant. “The Mortgagee must select an FHA-approved 203(k) Consultant from the FHA 203(k) Consultant Roster in FHAC. The Mortgagee must not use the services of a Consultant who has demonstrated previous poor performance based on reviews performed by the Mortgagee. The Consultant must inspect the | more...