Articles Published in: February 2018

February 15, 2018

Should I Refinance My Home Loan With An FHA Mortgage?

Should I refinance my home with an FHA mortgage? There are several reasons why it’s good to consider your FHA options when it’s time to start planning a refi loan. I Want To Refinance To Get A Lower Interest Rate If you pay attention to online mortgage loan interest rate reports, you’ll see that in general FHA mortgage loan rates are lower than their conventional counterparts. The interest rate issue can be hard for some to understand because they see these rates compared side-by-side and assume those numbers are at or near what they will be offered if they applied at that moment. But interest rates are negotiated between the borrower and lender for FHA refinance loans, and a borrower’s credit plays a large part in determining what interest rates | more...

February 15, 2018

The Truth About FHA Appraisals

By Joe Wallace

There are some borrowers who don’t know the truth about FHA appraisals. They mistake the appraisal process for something it is not and make the wrong assumptions about the home they are purchasing based on the outcome of the FHA appraisal. This has the potential to create major problems down the line, because relying on the appraisal alone (instead of paying for the optional but critically important home inspection) doesn’t give the borrower all the information she or he needs to make an informed decision about purchasing a property. There’s an old maxim about appraisals; basically that they are a tool for the lender, not the borrower. The FHA appraisal process is not intended to be a stamp of approval on the home implying that it is fully defect-free. Borrowers | more...

February 14, 2018

FHA Appraisal Rules When Switching Lenders

By Bruce Reichstein

Do you know what the FHA loan appraisal rules are for switching lenders? It’s true that not all borrowers will experience a situation where a change in lenders is needed, but a borrower is free to do so under FHA loan rules. In such cases an appraisal transfer may be required, and in others the new lender may wish to order a second appraisal. Is the new lender allowed to do so? According to HUD 4000.1, the FHA loan handbook, the lender is prevented from ordering a second appraisal (new lender or not) just to get a different result from the process. But there are circumstances where the new appraisal might be necessary and permitted. HUD 4000.1 states that for the original lender, “A second appraisal may only be ordered | more...

February 14, 2018

Can I Get A Second FHA Appraisal If I Don’t Agree With The First One?

By Joe Wallace

A common question some newcomers to the home buying process ask; “Can I get a second FHA appraisal if I don’t agree with the first one?” FHA loan rules anticipate situations like these. Some borrowers or sellers don’t share the opinion of the appraiser for a variety of reasons; some may simply wish to have the home appraised again to see if the results are more advantageous. But FHA loan rules don’t allow a second appraisal simply for the purpose of getting a different result. HUD 4000.1, the FHA loan handbook, instructs the lender on how she may proceed with a second FHA appraisal request. For example, page 128 of HUD 4000.1 states clearly, “The Mortgagee is prohibited from ordering an additional appraisal to achieve an increase in value for | more...

February 13, 2018

What Can Affect An FHA Appraisal Or Inspection?

By Bruce Reichstein

What can affect an FHA appraisal or an FHA-required inspection? There are many factors that might influence the outcome of these procedures. For example, borrowers who are having a home custom-built using an FHA One-Time Close construction loan will learn about appraisal requirements that include noting the proximity of the project to gas stations, power lines, and other safety-related issues. The rules that instruct the lender and appraiser in these areas can be found in the FHA loan handbook, HUD 4000.1. Airport hazards, slush pits, and operating oil wells are just some areas the appraiser will note where applicable. For projects classified as New Construction under FHA loan rules, the appraiser must note the general environmental conditions of the area of the construction project and adjacent areas. According to HUD | more...

February 13, 2018

Am I Eligible For An FHA Mortgage?

By Joe Wallace

Am I eligible for an FHA mortgage? That is a very common question, but many borrowers have a specific reason for asking-they want to know if a certain credit problem or work/life situation might disqualify them from an FHA loan. I Have A Recent Bankruptcy Borrowers with bankruptcy issues will have to discuss their situation with a participating lender, but in general at the very minimum you will be required by FHA guidelines to wait a full year (called a “seasoning period”) before applying for a new loan. In some cases you may be required to wait longer, and lender standards apply above and beyond the FHA loan rules. Getting a loan post-bankruptcy requires the applicant to have good credit habits post-bankruptcy, and in some cases you may need the | more...

February 12, 2018

Who Can Apply For FHA Reverse Mortgages?

By Joe Wallace

Who can apply for an FHA reverse mortgage? Borrowing money to take advantage of the value in the home is not a new concept, but the reverse mortgage is a type of loan that’s quite different than a standard FHA refi loan. What Is The FHA Reverse Mortgage? A reverse mortgage is a loan that obligates the borrower without requiring monthly mortgage payments. FHA reverse mortgages, also known as Home Equity Conversion Mortgages or HECMs for short, offer the borrower cash or a line of credit in an amount agreed upon between the borrower and lender. That amount is determined in part by the value of the home, so FHA HECM loans will require a new appraisal to see what the current fair market value of the property might be. | more...

What Credit Score Is Needed For An FHA Mortgage?

February 9, 2018

Can I Request An Appraisal Update For An FHA Mortgage?

By Bruce Reichstein

Can I request an appraisal update for an FHA loan? The FHA appraisal expiration issue is one that won’t affect all borrowers, but when it does become an issue, it’s good to know what the FHA loan rules are; in general FHA appraisals have a 120 day validity window, with an option for a 30-day extension. The 30-day extension is, as we discussed in a previous blog post, addressed in the FHA loan handbook as follows: “The 120 Day validity period for an appraisal (see Ordering Appraisals) may be extended for 30 Days at the option of the Mortgagee if (1) the Mortgagee approved the Borrower or HUD issued the Firm Commitment before the expiration of the original appraisal; or (2) the Borrower signed a valid sales contract prior to | more...

February 8, 2018

When Does My FHA Appraisal Expire?

By Joe Wallace

When does my FHA appraisal expire? It’s a question that not all borrowers find themselves of need of answering, but there are cases where there may be unexpected delays trying to get to loan approval or a closing date. Some borrowers get nervous about issues like appraisal expiration. Should they be? General FHA Loan Rules Governing The Age Of Loan Documents In general, there’s a basic expiration for FHA loan documents except for “evergeen” paperwork submitted as part of the loan package such as supporting documentation for divorces, alimony payments, tax documents, and related information. HUD 4000.1 says of the general age of loan documents, “Documents used in the origination and underwriting of a Mortgage may not be more than 120 Days old at the Disbursement Date. Documents whose validity | more...

February 8, 2018

HUD Announces Hurricane Aid For The Virgin Islands

By Joe Wallace

The Department of Housing and Urban Development has announced a multi-million dollar aid package for hurricane recovery efforts in the U.S. Virgin Islands. According to a press release at the HUD official site, “The U.S. Department of Housing and Urban Development (HUD) today awarded $242.7 million to help the U.S. Virgin Islands to recover from Hurricanes Irma and Maria. HUD’s Deputy Secretary Pamela Hughes Patenaude announced the disaster recovery grants with Governor Kenneth E. Mapp during a tour of damaged homes in St. Thomas”. The HUD recovery funds, similar to those authorized for disaster recovery efforts in Puerto Rico, are via HUD’s Community Development Block Grant – Disaster Recovery (CDBG-DR) Program and “support long-term recovery, including infrastructure, seriously damaged housing, and economic recovery in the Territory” according to the HUD | more...