Articles Published in: 2020

October 16, 2020

Planning A Home Loan? Beware Holiday Credit Card Use

A borrower’s debt-to-income ratio is an important part of the financial qualifications your lender will look at when trying to decide to approve or deny your mortgage loan application. Some future borrowers don’t help themselves out in this regard during holiday time and as we approach November and December, those in the planning stages of their mortgage loan journey should beware of opening new credit or increasing credit card use on existing accounts. Why? Credit Card Use Spikes At Holiday Time Traditionally, American consumers tend to increase credit use during the holiday season and it never pays to ignore this factor–take your potential holiday spending into account when planning for a new mortgage loan. In some cases the amount of the credit card debt isn’t the problematic factor–timely payments is | more...

October 15, 2020

Who Is Eligible For An FHA Home Loan?

By Bruce Reichstein

Who is eligible for an FHA home loan? To begin, we must point out that FHA mortgages are not need-based loans, feature no income caps, and do not require you to be a first-time home buyer to apply. FHA mortgage eligibility rules are found in HUD 4000.1, including instructions for the lender pertaining to who is allowed to apply for an FHA single-family home loans. Who can apply for an FHA loan and what do the rules say about these applicants? Some of the rules about being eligible for an FHA mortgage have to do with the status of the buyer–does the borrower intend to be an owner-occupier or does the borrower want to purchase property they do not intend to use as the primary residence? FHA mortgage loans to | more...

October 14, 2020

FHA Mortgage Loan Issues: “Identity Of Interest”

By Joe Wallace

What does it mean to have an “identity of interest” when applying for an FHA home loan? This can be an issue if the borrower has been renting the property to be purchased with an FHA mortgage from the seller prior to the home loan application. That is not the only issue addressed under the rules for identity of interest–those with family ties buying or selling to one another may also need to have an understanding of the rules in this area. What is the meaning of “identity of interest?” The FHA loan handbook, HUD 4000.1, describes identity of interest transactions as a real estate sale between two parties “with an existing Business Relationship” or between family members. The word “interest” in this case refers to the interest the seller | more...

October 12, 2020

Applying For Your Home Loan With Other Credit Applications Recent or Pending

By Bruce Reichstein

Here is a variation on a common question asked about applying for an FHA home loan. “I recently applied for financing for a vehicle. Do I still qualify for an FHA mortgage?” In general, borrowers should avoid opening new lines of credit ahead of a mortgage loan application. FHA mortgages, like other home loans, require the lender to justify the loan as a good credit risk. If a borrower is opening new lines of credit at or near the time the home loan application is turned in, it may make the lender think twice about approving the mortgage. One reason for this is that entering into other types of debt while applying for a home loan may give the impression (right or wrong) that the borrower isn’t disciplined with credit | more...

October 9, 2020

FHA Appraisal Refunds?

By Joe Wallace

Some borrowers don’t understand the nature of the home loan appraisal process and as a result, they often ask a common question if the results of the appraisal don’t come back as expected. The process works like this–a buyer goes looking for a home to purchase with an FHA mortgage. They find a home they want to buy and before the home loan can be approved, there is a required FHA appraisal. The appraisal is a tool for the lender, not the borrower, to help establish the market value of the property and insure the house meets minimum standards. The home loan amount is based in part on the appraisal and homes don’t always appraise for what the borrower or seller thinks it should. In situations where the appraisal comes | more...

October 8, 2020

FHA Cash-Out Refinance Loan Questions And Answers

By Bruce Reichstein

Do you know what to expect when you want to refinance your mortgage in order to cash in on the value of your home? Are you wondering how much money will you get in cash at closing time? These and other questions are important–knowing the answers before you commit or at least knowing how to arrive at those answers is crucial before you commit to the refi loan. Here are some common questions about FHA Cash-Out Refinancing loan options you should know: Do FHA Cash-Out Refinance Loans Cost The Same In All Housing Markets? The short answer is no, and the reason for this is that all housing markets differ, lender standards differ, and your own personal needs and goals may affect the type of transaction you need. For those | more...

October 7, 2020

Getting Ready For Your Home Loan

By Bruce Reichstein

Are you considering your home loan options? FHA mortgage loans have more flexible credit requirements more consumer-friendly loan options, but even with more lenient credit guidelines (compared to some conventional mortgages) there are a number of areas to consider in the preparation stages of your loan. Some are already ahead of the curve when it comes to getting financially ready for a major loan application, others are really starting from ground zero. Do you know how ready you are to fill out that mortgage loan application? Having Enough Preparation Time Is Important It does cost money to buy a home–there are plenty of up-front costs including appraisals and the home inspection, etc. Financial experts advise taking at least a full year to save, budget, and even to research the new | more...

October 6, 2020

The FHA Refinance Loan

By Joe Wallace

Mortgage loan interest rates have, at the time of this writing in October 2020, been hovering at or near historic lows, though in recent days FHA mortgage loan interest rates have moved out of the two percent range and into the three percent zone. Many watched mortgage rates dip below that three percent zone and there were plenty of home owners interested in taking advantage of those low rates to refinance their mortgages. There are many reasons to consider refinancing including saving money over the lifetime of the loan by paying a lower interest rate and/or getting into a lower monthly mortgage payment. If you are ready to commit to a refinance loan, you have multiple options to refinance out of a conventional loan or other non-FHA mortgage. You can | more...

October 5, 2020

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

By Joe Wallace

Can I get a second FHA appraisal if I don’t agree with the first one? This is a common question, normally asked if the appraised value of the home comes in differently than a buyer or seller expects it to. FHA loan rules don’t allow a borrower to be forced into purchasing a home where the appraised value is lower than the asking price, so it’s an issue that can definitely affect a home loan transaction depending on what the borrower wishes to do in such cases. Can I Order A Second FHA Appraisal? FHA appraisals are ordered by the lender, so the borrower cannot initiate any second appraisal requests. In any case, the lender is restricted on how and when a second appraisal may be ordered. Specific Restrictions On | more...

October 1, 2020

Buying A Home With An FHA Loan: What’s Allowed, What’s Not

By Bruce Reichstein

FHA mortgages are great for borrowers who want a lower down payment, no early repayment penalties, and more flexible home loan approval guidelines than some conventional counterparts. But the tradeoff comes where certain kinds of property and other loan details are concerned. If you want a home as opposed to an investment, an FHA mortgage is right for you. That includes those who want to build a home from the ground up instead of buying someone else’s property. Whether you want a traditional suburban home, a mobile home, a condominium, or even a duplex or multi-family unit, there’s an FHA mortgage for those purposes. But what about those who want to buy a house they can rent out to others, or those who want a mixed-use property that can handle | more...