Articles Published in: November 2021

November 30, 2021

Do I Have To Make A Down Payment On An FHA Mortgage?

One variation of a commonly asked question about FHA home loans is, “Do I have to make a down payment on an FHA mortgage?” This question gets asked sometimes in reference to other government-backed loans that feature no down payment (available via a Department of Veterans Affairs program offered to qualifying military members and certain military spouses only). FHA home loans do require money down-the borrower’s minimum required investment is 3.5% of the adjusted value of the home. But the borrower does not always have to pay that money out of pocket. Why? State and local down payment assistance programs can help–a borrower using a state or local program that meets FHA standards for third-party down payment help could save thousands upfront on the loan. What kind of standards are | more...

November 29, 2021

New to FHA Loans? Things You Need To Know

By Joe Wallace

What are the FHA loan basics you should know as a first-time homebuyer? The first thing you should remember is that FHA loans are not restricted to first-time buyers, but there ARE state-level down payment assistance programs and closing cost assistance programs that may be able to help you with your FHA mortgage as a first-time buyer. Those programs can help save you thousands of dollars in up-front costs on the down payment and other expenses with your loan. Remember that FHA loans permit your seller to contribute up to six percent of your closing costs as an incentive to close the deal, but any amount valued above that six percent results in a dollar-for-dollar reduction in the FHA loan amount. First-time home buyers are sometimes not aware that they | more...

November 24, 2021

When Will You See The New FHA Home Loan Limits For 2022?

By Bruce Reichstein

FHA loan limits for 2022 have not been published at the time of this writing but many who are planning to purchase a home in the new year are eager to know whether loan limits are changing–higher or lower depending on where you live. When do the new rates get published? This time last year, FHA loan limits for 2021 wound up being published on December 2, 2020, FHA issued Mortgagee Letter 20-41 (setting the FHA loan limits for purchase loans, also known as forward mortgages) and Mortgagee Letter 20-42, establishing the limits for FHA Home Equity Conversion Mortgage loans. In both cases, the loan limits are effective starting on the first day of the new year and not before. That means that even if you can look up the | more...

November 23, 2021

Problems That Can Stop Your Mortgage Being Approved

By Joe Wallace

Do you know what can stop your home loan or result in your being denied a mortgage? There are multiple factors that can complicate the mortgage process and you should know about the ones you can control and those issues that may be beyond your ability to anticipate. What kills a home loan dead in its’ tracks? One serious issue is associated with the appraisal. To buy a home with an FHA mortgage, you need to select a property that has a remaining “economic life” that will last the entire duration of the mortgage. OR you need to buy a fixer-upper with an FHA Rehabilitation loan to simultaneously buy and renovate the property to bring it up to local building code and FHA minimum standards. But no matter which way | more...

November 22, 2021

How To Get Cash Back On An FHA Home Loan

By Joe Wallace

Do you need to know how to get cash back on an FHA home loan? If you want to purchase a home with an FHA “forward mortgage” you might be tempted to ask your lender if it’s possible to apply for more mortgage loan money than is required to complete the transaction. This question usually comes with the hope of being allowed to take the extra loan funds out in cash similar to a personal loan. Some borrowers want to know if they can do this, but that specific scenario is definitely NOT possible under FHA home loan rules. Borrowers are not permitted to get cash back in such cases (we’re discussing FHA purchase loans here and NOT FHA cash-out refinance loan options) except in the form of a refund | more...

November 19, 2021

Updated FHA Appraisal Rules

By Joe Wallace

The Federal Housing Administration has issued a set of revised instructions for FHA appraisals that’s meant to bring the process more fully in line with the Fair Housing Act. What kind of changes? We’ve discussed the basics in a previous article, but the specifics required include modifications to HUD 4000.1, the FHA Single Family Lender’s Handbook. One big change is an entry in a new section called Appraiser Conduct, which includes the following instruction; the appraiser is required to be competent, independent, and objective. But the appraiser must also NOT: • Discriminate in “developing any part of the appraisal or value conclusion based on characteristics that are protected by federal, state, or local laws”; • Misrepresent “the scope of work performed in the completion of the FHA appraisal”; • Develop | more...

November 18, 2021

HUD Updates Appraisal Guidelines

By Bruce Reichstein

The FHA and HUD are updating appraisal requirements for residential mortgage loans guaranteed by the Federal Housing Administration. In June of 2021, President Joe Biden announced a move to bring appraisals into compliance with Fair Housing Act guidelines–the move was introduced as an effort called the Interagency Task Force on Property Appraisal and Valuation Equity or PAVE. The FHA has issued guidelines that reinforce and clarify the “existing requirements for Appraisers and Mortgagees regarding compliance with Fair Housing laws” related to the appraisal of properties that will serve as security for FHA-insured mortgages. What kind of guidelines? A Mortgagee Letter published at HUD.gov states that the federal agency “expects all parties engaged in FHA mortgage insurance programs to eliminate all considerations of race, color, national origin, religion, sex, familial status, | more...

November 17, 2021

Worried About Getting Scammed During Your Home Loan Approval Process?

By Joe Wallace

There are plenty of warnings about mortgage scams, mortgage-related identity theft schemes, and much more. We could go into the specifics of one or two of the more popular variations, but it’s equally important to know how to protect yourself more or less unilaterally against such threats to your privacy, your personal data, and your money. The first type of “best practices” you should adopt to protect yourself against scams of any kind? Refusing to respond to “out-of-the-blue” contacts on social media, text messages, or emails that you did not initiate. People get contacted unsolicited for legitimate reasons all the time. What we’re talking about here is third parties who write you trying to get you to click on a link, provide your account information, or perform some other act | more...

November 16, 2021

FHA Refinance Loans Versus Freddie Mac Refi Possible

By Joe Wallace

FHA refinance loans are a good option for borrowers who may need a more flexible credit score requirement to apply, and for those who want to get out of an adjustable-rate mortgage into a fixed-rate home loan. But how does the FHA refinance loan program compare to the conventional Freddie Mac Refi Possible program? Some wonder if they shouldn’t consider a conventional refinance loan program like Refi Possible instead of an FHA refinance option. Should you get a Refi Possible loan instead of an FHA Streamline Refinance or an FHA Cash-Out Refinance? For some borrowers, who meet the Freddie Mac requirements for this program, the answer is yes. These are borrowers that meet the Freddie Mac income restrictions for the program (income at or below the area median income guidelines for | more...

November 12, 2021

How Long Do You Have To Be At A Job To Get An FHA Loan?

By Bruce Reichstein

How long do you have to be at one particular job to get an FHA loan? The employment issue is an important one, but some borrowers misunderstand the rules, thinking them to be more strict than they actually are. What is the reality of the FHA loan employment rules? FHA Loan Rules For Minimum Employment Standards The rules governing FHA loan employment standards are found in the FHA loan handbook, HUD 4000.1, which includes the following requirement on how the lender must verify the borrower’s employment history: “Mortgagees must not accept or use documents relating to the employment, income, assets, or credit of Borrowers that have been handled by, or transmitted from or through the equipment of unknown parties, or Interested Parties.” Furthermore, the lender “may not accept or use | more...