Articles Published in: 2019

May 30, 2019

FHA Loan Rules: Adding Repairs To The Sale Price Of The Home

FHA loan rules for new purchase home loans include regulations on how the cost of repairs can be added to the sale price of the home to be purchased with an FHA mortgage. Th rules for this are found in HUD 4155.1, Chapter 2 Section Five, which states: “Repairs and improvements may be added to the sales price before calculating the mortgage amount when the • repairs and improvements are required by the appraiser as essential for property eligibility, and paid by the borrower, and • sales contract or addendum identifies the borrower as responsible for payment, and completion of the repairs.” FHA loan rules in this section state that, “Only repairs and improvements required by the appraiser may be included.” How does this all work? Chapter Five has a | more...

May 30, 2019

FHA Appraisal Rules You Need To Know

By Bruce Reichstein

Are you a first-time home buyer? Are you looking into your FHA home loan options and not sure what the appraisal process is all about? The FHA appraisal is a tool for the lender to determine the home’s fair market value and a way to make sure a property meets MINIMUM standards. No matter what you might hear (and some mistakenly call the appraisal an “inspection”) the appraisal will not tell you the true condition of the home. Even the FHA and HUD themselves warn borrowers to pay for the optional home inspection (which is technically not a requirement, but then again, neither is test-driving your car before you buy it). And what should borrowers know about the FHA appraisal process? The appraisal’s most important feature for some borrowers is | more...

May 29, 2019

FHA Refinance Loans: Questions To Ask

By Joe Wallace

Are you ready for a refinance loan? Maybe you seek a lower interest rate, or maybe you want to get cash back on the transaction? Whatever your motivation for applying for an FHA refinance loan, there are some important questions to ask yourself-the answers will help determine your readiness for the new loan. Have I Checked My credit Score and History Lately? All consumers are entitled to a free credit report, which you should review long before attempting a mortgage refinance. If you find any evidence of identity theft, outdated or erroneous information, you will need time to contest that problem. Contesting your credit report could involve (in the case of identity theft and related issues) filing police reports, working with investigators, etc. Do not waste your time paying for | more...

May 27, 2019

Happy Memorial Day 2019!

By Joe Wallace

Happy Memorial Day! We pause today from our usual posts about FHA home loans, refinance loans, FHA One-Time Close construction loans and related topics to recognize the sacrifices made by our women and men in uniform. Thank you to all who have served-from those who have gone before to those who are about to enter their first year in uniform in service to our country. We return with our regularly scheduled posts on Tuesday. Thank you for reading, and have a safe and happy Memorial Day 2019.

May 24, 2019

HUD Announces Minneapolis Housing Discrimination Case Settlement

By Bruce Reichstein

Sexual harassment that occurs in the context of seeking or keeping housing is a violation of federal law. Some house hunters and renters don’t realize this. They also may miss the fact that renters, house hunters, and home owners also have recourse when they are sexually harassed in the context of finding or keeping a rental property or owning a home. The Department of Housing and Urban Development has announced a settlement in a Fair Housing case brought against David Sheets, a Minneapolis property owner. According to the HUD official site, the agency has approved an agreement “between a Minneapolis property owner and a female tenant who alleged the landlord solicited sex from her in exchange for a reduction in her rent”. The Fair Housing Act makes sexual harassment associated | more...

May 23, 2019

Home Values Dropping: FHA Loan Rules You Should Know

By Joe Wallace

Real estate values could be entering a new phase if some real estate blogs are to be believed; a Zillow.com report notes that median home values declined a bit in the spring of 2019. A different online real estate publication notes, “Though values didn’t drop year-over-year, their growth rate to (sic) lag behind 2018’s number.” That information does not necessarily help or hurt a house hunter looking for an FHA mortgage and a home to buy at the moment, but there are some important FHA loan rules to remember that WILL help you in cases where property values or house prices are in a state of decline. Where are values going lower according to Zillow? How about San Francisco? Pittsburgh? Others named include Seattle, Los Angeles, and San Diego. You | more...

May 22, 2019

What Is An FHA REO Home?

By Joe Wallace

The FHA Real Estate Owned program or FHA REO program has gotten some media attention lately, which likely has more people wondering what exactly this program is. The HUD REO program, sometimes known as HUD Homes, is described on the FHA / HUD official site as “…a 1-to-4 unit residential property acquired by HUD as a result of a foreclosure action on an FHA-insured mortgage. HUD becomes the property owner and offers it for sale to recover the loss on the foreclosure claim”. The HUD Home Store is the official HUD site used to list these HUD REO homes for sale to the public, real estate brokers, state and local governments and nonprofit organizations. What does the general public need to know about buying HUD REO homes? According to HUD, | more...

May 21, 2019

Questions A First-Time Home Buyer Should Ask The Seller

By Bruce Reichstein

First-time home buyers and those who have purchased a home before but haven’t had to explore housing markets in a while should make a list of questions to ask the seller of a home placed on the real estate market. Sometimes it’s not the answer to the questions as much as the way the seller answers those questions-your ability to ask important questions in those cases is important, but so is paying attention to how the questions get answered. For example, the question, “Has the roof ever been replaced or repaired?” may get you a direct answer; “No, nothing has ever gone wrong with the roof”. But if the seller hesitates or offers a less-than-forthcoming answer, such as, “I don’t remember anything going wrong with the roof” or “No, the | more...

May 20, 2019

FHA One-Time Close Construction Mortgage Basics

By Joe Wallace

FHA home loan options are not limited to existing construction housing. FHA borrowers, including first-time home buyers, have the option to apply for a FHA One-Time Close Construction loan. This allows any borrower who financially qualifies to have a home built for them from the ground up. FHA One-Time Close loans have some basic requirements; some of these are FHA loan program rules, but others are unique to an individual lender. For example, FHA One-Time Close mortgages, also known as FHA OTC loans, technically allow a borrower to build a home with more than one unit. But many lenders may restrict these mortgages to single-unit properties. Or they may not permit the financing of certain closing costs, require higher FICO scores, etc. Much depends on the rules of the specific | more...

May 17, 2019

FHA Loan Appraisal Questions: Why Is Peeling Paint A Problem?

By Joe Wallace

One common question about FHA appraisals involves the issue of peeling paint. This can be a problem for some homes, especially those built on or before the year 1978. Borrowers want to know why the appraiser reviewed the home (the appraisal is not a property inspection) and required a correction of a peeling paint issue as a condition of loan approval. The borrower’s question in these cases is normally a variation on, “It’s just a cosmetic issue, why is the appraiser making a big deal out of peeling paint?” Unfortunately, for homes (including condo units) built on or before 1978, peeling paint is not just a cosmetic problem due to the use of lead paint in those construction projects before it was recognized as a safety hazard. FHA home loan | more...