Articles Published in: July 2020

July 30, 2020

First-Time Home Buyer? FHA Loan Basics You Should Know

2020 has brought incredible low mortgage rates, surging refinance loan applications, and sustained buying and selling homes; all this in the midst of the coronavirus pandemic. Historically low mortgage loan interest rates mean greater interest in loans and the savings current rates could provide. If you are just getting started on the road to homeownership, there are some FHA home loan basics to know as you research your mortgage options. Different Homes, Different Loans One myth of the home loan market is that there is a generic loan for any type of property you want to buy. That’s not true–there are different loans for different purposes. For example, if you want a low-down-payment loan to help you build a house on your own land, the FHA One-Time Close construction loan | more...

July 29, 2020

HUD Announces Extended COVID-19 Guidelines For Self-Employment Income Approval

By Bruce Reichstein

The FHA and HUD have announced an extension to some of its’s temporary coronavirus measures created to help participating lenders approve FHA home loans. This announcement was made in a group message containing other guidelines with changes via a “multisubject mortgagee letter” by HUD in the last week of July 2020. “COVID-19 Multisubject: Updated Temporary Guidance for Verification of Self-Employment; Rental Income; 203(k) Rehabilitation Escrow Account” is a HUD mortgagee letter with updates that affect FHA loan rules for applicants trying to qualify for an FHA mortgage with self-employment income. There are other updates for those who want to purchase a home using rental income to qualify–we’ll explore that information in a future blog post. The measures announced in the FHA mortgagee letter are not permanent; it’s part of a | more...

What Credit Score Is Needed For An FHA Mortgage?

July 28, 2020

Getting Ready For Your Home Loan

By Joe Wallace

Even during the global pandemic, people still need to buy and sell houses to live in. The real estate markets in America have not shut down, and even as you read this there are mortgages entering the closing stages. Are you looking for a new home to live in? If you are, it’s likely you’ve asked yourself whether your credit is ready for a major credit application; do you know what to do if your credit report needs correcting? One of the most common bits of advice in this area is that all borrowers should start preparing by getting very familiar with the contents of your credit report. But there is another step to take at the same time you’re doing that. Set Your Bills To Autopay When you review | more...

July 27, 2020

One Time Close Mortgage Loans: The Base Home Sales Price

By Bruce Reichstein

There are home loans for borrowers–even first-time home buyers–to allow the construction of a home from the ground up. They are called One-Time Close construction loans and are available from participating FHA, VA, and USDA lenders. One Time close loans, also known as single-close construction loans, feature one loan for both the construction of the home and the purchase of that home. When you apply for a construction loan, one area you’ll soon learn about is something called the base home sales price. This is essentially the base cost of the project using the contractor’s standard designs and features–you choose the design and features and those choices generate a base price. Choosing Features, Materials, Design How do these choices affect cost? Consider the design itself. What is the cost of | more...

July 24, 2020

FHA Mortgage Rates Lower In June 2020

By Joe Wallace

The year 2020 has brought some incredible activity on mortgage loan interest rates; at the time of this writing FHA loan interest rates remain below three percent–in the final days of July we saw mortgage rates fall to a low of (best execution) 2.38%. That rate was reported on Thursday, July 24 2020. Lower rates have prompted many to consider refinancing, but there are plenty of first-time home buyers hoping to be offered a lower rate in the current circumstances. Buying a home can be tougher during coronavirus containment measures (lockdowns, social distancing, etc.) but for those with access to the lower rates, it pays to be safe but persistent. Multiple Factors Responsible For Lower Rates Mortgage rates have dropped and stayed low due to a variety of factors including | more...

July 23, 2020

FHA Loan Limits: Where To Find Them

By Bruce Reichstein

FHA home loans, like most government-backed mortgages except for VA loans, feature loan guaranty limits which are established by county. These are annual limits and are revised (or at least considered for revision) every year. The FHA and HUD set FHA loan limits for areas that are average-cost housing markets, but also for high-cost counties and low-cost areas. FHA loan limits vary depending on a variety of factors including the nature of the cost of local housing. States have similar FHA loan limits in most counties with an outlier here or there; other housing markets (including California and New York) may have more high-cost counties than low-cost ones. East Coast real estate markets can be notorious for this, depending on location, and the FHA loan limit rules are designed to | more...

July 21, 2020

HUD Announces Agreement In California Fair Housing Act Case

By Bruce Reichstein

The federal law known as the Fair Housing Act protects consumers at all levels of the housing process. Buyers, renters, house hunters, all are protected against illegal discrimination thanks to the provisions of the Fair Housing Act that require only financial qualifications to be used when approving housing, providing accessibility for disabled tenants, etc. But sometimes there are violations of these laws and when those violations are brought to the attention of the authorities, an investigation may lead to changes in the way housing issues are handled by a particular agency, landlord, etc. The latest of these actions includes a Department of Housing and Urban Development’s announcement of an agreement in a Fair Housing Act case in Sacramento, California. The Sacramento Housing And Redevelopment Agency (SHRA) was accused of Fair | more...

FHA One-Time Close Construction Mortgage Basics

July 19, 2020

FHA One-Time Close Construction Loan Rules

By Bruce Reichstein

What do borrowers need to know about FHA One-Time Close construction loans? There are two very important areas to keep in mind. One involves the lender’s specific requirements to qualify for this single-close construction loan, and the other involves FHA loan rules. The two are not always identical and this is something to be aware of when going into the loan application process. FHA One-Time Close mortgages are different than existing construction loans because the home must be designed, built, and paid for from the ground up and there are varying time frames under which this will be done. Purchasing an existing construction home means getting to move in much more quickly, but the trade-off is that you are purchasing someone else’s home rather than having one built especially for | more...

July 17, 2020

FHA And HUD Propose Revised FHA Loan Guidelines

By Bruce Reichstein

The FHA and HUD have proposed an overhaul of its single-family mortgage loan program with an eye on “expediting homeowner assistance and achieving operational efficiencies” designed to lower the costs of servicing FHA mortgages. The FHA has proposed a set of policies that–while not currently adapted and are under a review and industry comment period–are designed to “remove unnecessary barriers for homeowners seeking mortgage payment relief,” according to an FHA press release as well as “achieve operational consistency with industry standard best practices”, details of which are listed below. These proposed alterations come at a time of increased uncertainty as coronavirus outbreaks have increased across a large number of states and the threat of extended or additional lockdown measures looking large. The FHA and HUD seek to improve the ability | more...

July 16, 2020

Answers To FHA Loan Limit Questions

By Joe Wallace

There are some common questions about FHA home loan limits for the Single-Family Mortgage program. Do you know what the home loan limit is in your area or how it affects your mortgage transaction? Do All Government-Backed Mortgages Include Loan Limits? At one time, all government-backed home loans carried a loan limit. However, in 2020 after changes in federal law, the Department of Veterans Affairs altered its VA Home Loan program to eliminate mortgage loan limit requirements. FHA mortgages and USDA mortgages still have loan limits. What Are FHA Loan Limits? The FHA loan limit is a calculation made by the FHA. The limit is based on “the median house prices in accordance with the National Housing Act” according to the official site. The limits are published once at the | more...