Articles Published in: 2021

January 19, 2021

Home Loans And Your Credit Score: The Cost Of Your Mortgage

Did you know that credit scores affect more than the simple approval or denial of your mortgage? Your overall costs for the mortgage over the long term will depend in part on your FICO scores, as we’ll explore below. FICO Scores And Your Down Payment You have not one, but TWO FICO score standards to meet when you want to apply for a large loan such as a mortgage. The first standard is from the FHA itself (these are the FHA minimum requirements for the Single Family home loan program) and the second is your lender’s standards. Naturally these will vary from lender to lender. And your lender’s standards may or may not be higher than the FHA minimum. FHA FICO score minimums begin at 580 or better for maximum | more...

January 18, 2021

Celebrating Martin Luther King, Jr. Day

By Bruce Reichstein

Happy Martin Luther King, Jr. Day 2021! Banks and markets are closed today to observe the holiday and we too feel it’s very important to remember this important day. America owes a great deal to Dr. Martin Luther King, Jr. and we are proud to observe this day dedicated to him and his accomplishments. Today, we pause our regular coverage of FHA news and FHA loan topics to observe the holiday. We resume our usual schedule of posts tomorrow. Thanks for reading!

FHA Construction Loan Rule Changes In 2021

January 15, 2021

FHA And HUD Update Construction Loan Rules

By Bruce Reichstein

If you are in the market for a home but would prefer to have a house built to your specifications instead of buying another person’s dream home, the One-Time Close mortgage can help you build instead of buy. This type of loan has an FHA equivalent with low down payment requirements (3.5% in typical cases) and there’s also a VA home loan option for those with qualifying military service. The FHA and HUD recently updated its rulebook for FHA Construction loans; there are revised definitions of properties that qualify for construction loans as well as new inspection rules. Back in 2020, the FHA and HUD announced some pending changes to the FHA Single-Family Home Loan Lender’s Handbook, HUD 4000.1 due to policy alterations in 2018 and 2019. Those alterations required | more...

Buy or Build a House On Your Own Lot in 2020

January 14, 2021

What Are FHA Energy Efficient Mortgages?

By Joe Wallace

What is an FHA Energy Efficient Mortgage (EEM)? Whether you want to buy existing construction or choose to build a house on your own lot using an FHA One-Time Close mortgage, the FHA EEM can add funds to your loan. You read that correctly–these funds are added only after the loan amount has been calculated–this is an add-on to your loan and not a higher loan amount to qualify for (see below) Are you a first-time home buyer? Don’t mistake an Energy-Efficient Mortgage as a type of home loan option like an FHA Construction Mortgage or FHA Rehabilitation Mortgage. As mentioned above, an EEM is quite different. Why EEM Funds Are Added After Your Loan Amount Is Calculated The Energy Efficient Mortgage is an add-for purchase loans including FHA Rehab | more...

January 12, 2021

What Affects My FHA Loan Approval? Debt Ratio Issues

By Bruce Reichstein

Every mortgage or finance blog includes a lot of writing and advice about the need to monitor your credit reports. And make no mistake, this is important advice that is good to follow, but if you are in the market for a new home in 2021 the amount of monthly debt you have compared to your monthly income will be just as important for loan approval. Why Your Debt Matters Some applications crunch the numbers and believe they can afford the loan on paper. But what happens when that does not match what the lender gets when she runs your debt ratio numbers? People who technically qualify on paper but not in reality are bad risks for the lender and their jobs depend on screening out those bad risks. And | more...

January 11, 2021

FHA Mortgage Rates In Early 2021

By Joe Wallace

All eyes are on 2021 and what the new year could bring for housing markets, including what might happen with mortgage loan interest rates. FHA loans and other government-backed home loans saw sub-three-percent mortgage loan interest rates in 2020, and the earliest days of 2021 those rates did not rise above three percent. Mortgage rates for FHA home loans including FHA One-Time Close construction loans, FHA Rehab loans, and others remain below the three percent line (assuming ideal conditions including a well-qualified borrower) where they sat, more or less, for a significant amount of time in years past. American political chaos, the coronavirus pandemic, economic uncertainty, nervous investors, and other variables have all worked together to keep mortgage loan interest rates below three percent for the time being. Did the | more...

Don't Make These Mistakes With Your One-Time Close Construction Loan

January 8, 2021

Monitoring Your Credit Ahead Of Your Rehab Loan Or One-Time Close Loan

By Bruce Reichstein

Credit monitoring is important for any consumer but borrowers interested in building a home on their own lot using a One-Time Close (OTC) construction loan or even an FHA 203(k) Rehab loan should give serious thought about investing in credit monitoring as early as possible in the planning stages. This can be a big advantage for those seeking rehab or construction loans; participating FHA lenders may require higher FICO scores for construction loans and you’ll want every advantage in that department including knowing the contents of your credit report and the changes to it as they happen. FHA Rehab Loans allow borrowers to buy fixer-upper loans and have work done to bring them up to code and FHA standards; FHA One-Time Close (OTC) mortgage loans allow borrowers to build a | more...

January 6, 2021

One-Time Close Construction Loan Availability In 2021

By Joe Wallace

Here is a commonly asked question about One-Time Close construction loans; “I want to build my home instead of buying it but my lender says they won’t do a construction loan”. Or conversely, “I want to use a VA mortgage to build a home but the lender says they don’t offer VA construction loans. Can they do that?” If you are interested in building a home from the ground up instead of buying an existing property, you can use the One-Time Close construction mortgage to do so and there are a variety of options including both VA loans and FHA construction loans. People gravitate toward these mortgages because of more forgiving FICO score rules and lower down payment requirements. But not all lenders offer FHA mortgages or VA home loans; | more...

January 5, 2021

FHA And HUD Announce Streamlined Loan Paperwork

By Joe Wallace

The FHA and HUD have in the last year made efforts to streamline and revise aspects of the Single Family Home Loan program to increase the security of the program and make certain certification issues easier for participating lenders. HUD.gov announced it had finalized a revised loan-level certification form which is required as part of the FHA Single Family home loan process. Lenders must submit this form to the FHA for each home loan. What is the revised form? HUD Form 92900-A, Addendum to Uniform Residential Loan Application, this form is an FHA requirement and must contain signatures from the underwriter or “other lender representatives”, along with the signature of the loan applicant. The revised HUD Form 92900-A may be used by lenders immediately. It is required for all transactions | more...