Articles Published in: June 2018

June 12, 2018

Do You Suffer From Home Loan Anxiety?

Do you suffer from home loan anxiety? There are many people who want to apply for an FHA mortgage loan, often first-time home buyers looking at an existing construction loan or an FHA One-Time Close construction loan, who begin to worry about getting their loan application approved. Are You Worried About Being Able To Afford Your FHA Mortgage? There is good news for those who are worried they might not be able to afford the FHA home loan and can’t decide whether or not to apply. But there are tools you can use to help get an estimate of how much your FHA mortgage payment might run every month in the form of online mortgage calculators. These tools ask you to input an estimated price of the home, potential down | more...

June 11, 2018

FHA Loan-To-Value Limits: More Rules You Should Know

By Bruce Reichstein

In a previous blog post, we discussed some of the basic loan-to-value ratio rules (LTV) for FHA loans. Your loan-to-value ratio is calculated based on the amount of the required down payment a borrower has to make as part of the FHA mortgage loan transaction. When you buy a home using an FHA mortgage, the loan-to-value ratio can be affected by your FICO scores. A higher down payment requirement means a different LTV than for those who make the lowest possible downpayment on an FHA mortgage loan of 3.5% of the adjusted value of the property. But credit score issues aren’t the only things that can affect a borrower’s LTV on an FHA mortgage to buy a new home. Some FHA loan transactions, under FHA loan policy, require as much | more...

June 11, 2018

FHA Home Loans and Loan-To-Value Limits: Rules You Should Know

By Joe Wallace

FHA home loans have limits on the amount of the loan, how much of the loan the FHA will guarantee, and the loan-to-value ratio or LTV. The LTV of your home loan is basically the percentage of the mortgage compared to the value of the property. There’s an loan-to-value calculation required in part because the borrower is required in most cases to make a minimum down payment for “forward mortgages”. These down payments are not required by FHA loan rules for FHA rehab loans to fix or replace qualifying homes in federally-declared disaster areas, but for all other new purchase FHA loans, the borrower will be required to make a minimum down payment. FHA loan rules in HUD 4000.1 spell out the requirements for this down payment and calculating the | more...

June 8, 2018

FHA Loan Rules: Can The Seller Provide Appliances As Part Of The Sale?

By Bruce Reichstein

FHA home loan rules in HUD 40001. state that a seller can make contributions as an incentive to a buyer considering the purchase of the seller’s property with an FHA mortgage. But those contributions are limited to six percent of the purchase price. Anything more constitutes something known as an inducement to purchase. The FHA loan rules don’t penalize the borrower or seller for this per se, but anything deemed an inducement to purchase will result in a dollar-for-dollar reduction in the loan amount based on the financial value of those inducements (which, again, are in excess of six percent of the purchase price.) All that said, FHA loan rules also exclude certain seller contributions from consideration under the six percent rule; the seller can freely add certain things without | more...

What Credit Score Is Needed For An FHA Mortgage?

June 7, 2018

Reasons FHA Will Approve The Purchase Of A Second Home With An FHA Mortgage

By Joe Wallace

FHA loan rules in HUD 4000.1 require occupancy of the home as a condition of loan approval. This means that if you are buying, building, or refinancing a mortgage using a new FHA loan, at least one borrower obligated on the mortgage must live in the home as the main residence or home address. But there are some exceptions allowed in certain circumstances where a borrower can apply to buy another home with an FHA mortgage without selling the property originally purchased with an FHA guaranteed loan. What are these exceptions? Relocation To Another Area If a borrower’s job demands include a change of address, another FHA mortgage (without selling or paying off the first FHA loan) may be possible. This is permitted when the borrower is “relocating or has | more...

June 6, 2018

FHA Loan Rules For Down Payments And Cash To Close

By Bruce Reichstein

What are the FHA loan rules for down payments and the cash required to close the deal? There are many requirements in this area, but one very important detail exists that borrowers should know that will definitely help them in the early planning and budgeting stages of the mortgage. FHA loan rules require that certain expenses be kept separate from down payment requirements, and that can make a big difference in how you approach the budgeting part of home loan planning. FHA loan rules for both down payments and closing costs require that the sources of these funds be FHA-approved, which means no credit card cash advances, payday loans, or similar types of indebtedness can be a source of the closing costs or down payment. That’s important because those FHA | more...

Five FHA Home Loan Questions To Ask Your Lender

June 5, 2018

FHA Mortgage Loan Rules For Earnest Money Deposits

By Joe Wallace

When it’s time to get serious about a home you want to buy with an FHA mortgage loan, the payment of earnest money is an important step toward owning the property. FHA loan rules have specific requirements for earnest money deposits; like other payments associated with your home loan transaction, there are requirements for the payment and sourcing of these funds. The FHA Loan Handbook, HUD 4000.1, explains that the lender is required to verify and document the borrower’s earnest money deposit including the amount and the source when the earnest money exceeds one percent of the sales price or, as HUD 4000.1 explains, “is excessive based on the Borrower’s history of accumulating savings”. In such cases the lender must obtain: A copy of the borrower’s canceled earnest money check; | more...

June 4, 2018

What Does It Mean To Get An FHA Mortgage Loan Case Number?

By Bruce Reichstein

For those new to the home loan process, or just new to FHA mortgage loans, the question, ‘What Does It Mean To Get An FHA Mortgage Loan Case Number?” is a good one to ask. What is this process and how does it work? It does not matter if you are applying for an FHA 203(k) rehab loan, a typical new purchase FHA mortgage, or even an FHA One-Time Close construction loan; when a borrower is serious enough to start the loan application paperwork the FHA case number process will begin. HUD 4000.1, the FHA Loan Handbook, says an FHA case number is ordered by the lender when there is an active mortgage loan application for the property a borrower wants to purchase. What is required of the borrower to | more...

June 1, 2018

FHA Cash-Out Refinance Loan Credit Tips

By Joe Wallace

If you are considering an FHA Cash-Out Refinance loan, you’re likely wondering what credit tips will help you get closer to loan approval. If you are considering a cash-out refi loan, it’s best to start working on your credit as early as possible in order to make sure the hard work you do is evident when it’s time to fill out the loan application. Evaluate Your Current Budget Reviewing your budget won’t help with credit repair, but it’s an important first step. Why? The lender will be looking at your income compared to your outgoing monthly debt to calculate the debt-to-income ratio for your loan. If your debt is higher than a certain percentage (and lender standards will apply in this area as well as FHA loan rules) your loan | more...