Articles Published in: April 2018

April 19, 2018

Where Can My FHA Loan Down Payment Money Come From?

Where can my FHA loan down payment money come from? It’s an important question to ask, and some borrowers might not understand the difference between closing costs that are not part of the down payment compared to what is allowed to be counted toward it. FHA Loan Down Payment Requirements For most forward FHA mortgages, the down payment requirement includes a minimum of 3.5% of the adjusted value of the home. Some FHA home loans such as refinance mortgages don’t require a down payment; FHA rehab loans for those in Federally declared disaster areas are not required by the FHA to make a down payment regardless of whether the rehab loan is a forward mortgage or a refi. Is My Up Front Mortgage Insurance Premium Part Of My Down Payment? | more...

April 18, 2018

Switching FHA Lenders, Part 2

By Bruce Reichstein

In our previous blog post, we discussed borrowers who need to know FHA home loan rules for switching lenders, and when a new appraisal might be permitted under such circumstances. Borrowers do have the right to change lenders, the same way they have the right to refinance a mortgage loan using the same lender or a new one. If you need an FHA One Time Close construction loan, appraisal issues are quite different. The FHA will require inspections of the finished property to insure it complies with FHA standards and state/local code, but obviously the approach to a new construction home isn’t the same as an actual appraisal to determine the fair market value of existing construction properties. But for those who need a new purchase loan on an existing | more...

April 18, 2018

What You Need To Know When Switching FHA Lenders

By Joe Wallace

There are several reasons why a borrower might decide to switch FHA lenders during a home loan transaction. In cases where the switch happens, borrowers should know certain FHA guidelines that can affect the transaction-especially if an appraisal has already happened. Some borrowers think about switching lenders because they have had an unsatisfactory experience. Others may simply be offered a better deal. But there are some instances where the borrower is tempted to switch lenders because of an appraisal issue-namely that the appraisal did not value the property as expected. In such cases, when a borrower is tempted to get a new lender and a new appraisal, what should be known about that process? The first thing borrowers should know is that new FHA appraisals are not possible simply because | more...

April 17, 2018

Streamline Refinance Loan Rules: Is Cash Back Permitted?

By Bruce Reichstein

Do FHA Streamline Refinance Loans permit cash back to the borrower? Can you apply for “more” refinance loan than you need to pay off the original mortgage and take that cash at closing time? The FHA Streamline Refinance loan is for existing FHA mortgages; borrowers who have an FHA loan who want to refinance in order to get a financial benefit such as a lower payment, shorter loan term, or get out of an adjustable rate mortgage should consider this as an option. But is one of the financial benefits offered the ability to get cash back? FHA refinance loan options do include cash-out refinancing, intended for FHA and non-FHA loans alike. Let’s examine what the FHA loan handbook, HUD 4000.1, has to say about cash back to the borrower | more...

April 17, 2018

FHA Streamline Refinance Loans: Tangible Benefits

By Joe Wallace

What are the tangible benefits of an FHA Streamline Refinance Loan? Believe it or not, that phrase is not just a clever way to say “Streamline refinance loans can help you lower your payments.” The phrase “tangible benefits” is found in the FHA loan handbook to describe an outcome of getting the loan. “Tangible benefits” means some distinct help for the FHA Streamline Refinance loan borrower in the form of a lower mortgage rate, a lower monthly payment, the ability to get into a fixed rate mortgage and out of an adjustable rate loan, etc. In most cases an FHA Streamline refi is meant to give the borrower one or more of these benefits. In fact, HUD 4000.1 has specific instructions to the lender on this issue; “The Mortgagee must | more...

April 16, 2018

FHA Home Loans For New Construction, Existing Construction Homes

By Bruce Reichstein

FHA home loans are available for a variety of different types of property. You can use an FHA mortgage to buy a typical home in the suburbs, a condo, a town home, mobile or manufactured homes, etc. FHA home loans are also for properties classified in one of several ways; existing construction, new construction, proposed or under construction, etc. What do these terms mean and how does the property type affect the FHA home loan? In some cases the nature of the property may dictate whether a builders’ warranty must be provided. New construction homes, for example, must include a 10-year warranty. This is true for all property types that fall under the FHA definition of new construction property including proposed construction homes, under construction homes, and those that have | more...

April 13, 2018

What Is My FHA Home Loan Interest Rate?

By Joe Wallace

What is my FHA home loan interest rate? Borrowers want to know because it affects the overall cost of the mortgage for the lifetime of the loan, and when you are buying a home with an FHA mortgage (or any other kind of home loan) it’s important to think long-term; knowing how the interest rate affects your loan costs is a detail worth learning more about. But interest rates on FHA home loans are not (to the surprise of some) set or regulated by the FHA or HUD. The only real guidelines for basic FHA loan interest rates are that the rates must be applied in a manner that is reasonable and “customary” for the housing market you are buying in. The FHA does have regulations on how Adjustable Rate | more...

April 12, 2018

FHA One-Time Close Construction Loans: An Option You Should Consider

By Bruce Reichstein

The FHA One-Time Close / Single-Close construction loan is an option you should consider if you are interested in having a home built for you rather than purchasing an already-lived-in property. Construction loans are different than existing construction loans, and the FHA One-Time Close (OTC) / Single-Close construction loan offers a single application, a single closing date, and more peace of mind for the borrower once the loan has been approved. FHA One-Time Close / Single-Close Mortgages And FICO Score Requirements You will have higher credit requirements with an FHA One-Time Close loan due to the higher risk for the lender. Your application may require a FICO score of 620 or higher at the minimum, depending on the lender. Here’s a sample breakdown of FICO score requirements from one hypothetical | more...

April 11, 2018

FHA Loan Requirements For Multi-Unit Properties: Part Two

By Joe Wallace

In a previous blog post, we discussed the FHA loan rules for purchasing multi-unit properties. It’s true that an FHA borrower can buy a home with as many as four living units. It’s also possible to rent out the unused units in the home, but FHA loan rules do require at least one person obligated on the mortgage to occupy the home as the primary residence. FHA home loans are generally for owner/occupiers only. You are permitted to rent out the unused living units in your new home, but those units cannot be rented out for periods less than 30 days, offer hotel-style services such as food, bellboy service, etc. The rules for these issues are very clear, but what is to stop a borrower from purchasing a new home | more...

April 10, 2018

FHA Loan Rules On Purchasing Multi-Unit Properties

By Bruce Reichstein

Some potential FHA loan applicants are surprised to learn that they can purchase a home with as many as four living units using an FHA mortgage. For a certain percentage of FHA loan applicants, the ability to buy a four-unit property leads to thinking about becoming a landlord, renting out the units and using rental income to offset the expenses of owning the property. This has potential for some borrowers, especially those who already have experience in this area. But FHA loan rules have plenty to say about how your home may be used for such purposes. FHA loan rules in HUD 4000.1 define the acceptable uses of a home purchased with an FHA mortgage. Those uses include renting out unused living units, but with the caveat that the borrower | more...