Articles Published in: September 2022

September 30, 2022

Why Choose An FHA Mortgage?

You may have heard that the FHA loan program features a low minimum down payment, lower credit requirements, plus the ability to apply for extra loan funds to add energy-saving improvements to the home you are buying with an FHA loan. This is accomplished using a program called the FHA Energy Efficient Mortgage. FHA home loans, which are NOT for first-time home buyers only, are offered to all financially qualified applicants. These home loans, unlike some of their USDA counterparts, are not need-based and do not feature income restrictions. FHA mortgages are government-backed loans, which means there is an arrangement between the lender and the federal government that reduces the risk to the lender. This is why FHA lenders can offer you lower down payments and more competitive interest rates | more...

September 26, 2022

HUD Announces Fair Housing Case Settlement

By Joe Wallace

Did you know that Fair Housing laws are designed to protect you once you start owning or renting a home and not just while you are house hunting? You might not realize that sexual harassment can be a violation of the Fair Housing Act if happens in the context of seeking or owning a home. Has someone sexually harassed you as the employee of a lender, property management company, realtor, or appraiser? If you have, you may have grounds for a complaint with the Department of Housing and Urban Development. One example of this comes thanks to a recent settlement between HUD and California apartment owners/property managers. HUD has announced a conciliation agreement with respodnents including Perris Family Apartments, LLC., Coachella Valley Housing Coalition, Hyder Property Management Professionals, and an | more...

September 23, 2022

FHA Loan Credit Issues To Think About

By Joe Wallace

Credit scores are a very important part of qualifying for an FHA mortgage, but they are not the only factor to pay attention to. What follows is information about the other credit-related factors your lender will consider. To be sure, these factors may affect your FICO scores, but they are also viewed apart from your scores to determine your ability to realistically afford your mortgage. What are these factors? On-Time Payments Your participating FHA lender will review your credit report to see if there are late or missed payments, how many, and when they occurred. In general–and this is advice you will read on any mortgage blog or bank official site–if you have late or missed payments in the last 12 months, it can hurt your ability to get a | more...

September 21, 2022

Article Update: FHA Loan Rules For “Identity Of Interest” Transactions

By Joe Wallace

Back in 2016, we published an article about the specific FHA loan rules that apply in situations where the owner of a rental property wants to sell to her renters. In such cases, it may be a situation where the borrower has been renting for some time and has an offer from the landlord to purchase. Back when we first published the article, we noted that FHA loans do permit these transactions but there are special rules that govern them. Have those rules been modified since we reviewed them last? The rules for these transactions are found in HUD 4000.1, the FHA Single-Family Lender’s Handbook. Today, those rules begin by explaining who is affected in these circumstances, which are described by HUD as “identity of interest transactions”. From HUD 4000.1: | more...

September 19, 2022

Which Is Better: Conventional Mortgages Or FHA Home Loans?

By Bruce Reichstein

Which is better, a conventional mortgage or an FHA home loan? If you are struggling to make this choice, rising interest rates and home ownership costs might make you look twice at your upfront costs and other expenses associated with each type of mortgage loan. The more forgiving credit requirements and down payment expectations of an FHA mortgage may have you thinking twice about going conventional. When it comes to FICO scores, FHA loans on paper are easier to be approved for than conventional home loans. And while a conventional mortgage could be more affordable over the lifetime of the mortgage, those who need more flexible credit requirements and lower upfront costs may find the FHA mortgage worth considering. There are a few objections to FHA loans. Some are less | more...

September 16, 2022

FHA Home Loans For Houses In Flood Zones

By Joe Wallace

In 2017, we wrote an article about the importance of knowing FHA loan rules for loan approval in certain regions of the country subject to flooding. Is it possible to purchase a home with an FHA mortgage in a flood zone? The FHA Loan Single-Family Lender’s Handbook, HUD 4000.1, says that homes in certain types of flood zones or Special Flood Hazard Areas or SFHA are not eligible for FHA mortgages. These areas include, but may not be limited to SFHA Zone A, a Special Flood Zone Area, or Zone V. We reported that in 2017 and we wanted to follow up to see what the rules say today. Proposed or New Construction Homes HUD 4000.1 says that in cases where “any portion” of a home is in an SFHA, the | more...

September 14, 2022

FHA Appraisal Rules For Systems In The Home

By Joe Wallace

In 2016, we published an article about FHA loan appraisal rules for certain systems in the home. FHA appraisals have rules governing the process including some that address specific systems in the home. Make no mistake: some FHA appraisal requirements depend on the local authority, while other requirements have specific guidance. Depending on the issue your experience may vary. As we noted in 2016, FHA appraisal rules are found in HUD 4000.1, which is the rule book for all FHA single-family mortgage loans, refinancing, and reverse mortgages. Where heating the home is concerned, FHA loan rules include the following: “The Appraiser must examine the heating system to determine if it is adequate for healthful and comfortable living conditions, regardless of design, fuel or heat source.” The installed system must have | more...

FHA One-Time Close Construction Loans In 2019

September 12, 2022

FHA Loans and Home Inspections

By Joe Wallace

We get many questions about the FHA appraisal process. One variation on a common theme? The questions we get involving readers who opted not to get a home inspection, relied on the FHA appraisal process alone in determining whether the house was defect-free or not, and had complaints about the home later on. This is a situation common enough that it makes sense to emphasize the importance of NOT relying on the FHA appraisal process as a means to detect flaws or defects with a home that could be purchased with an FHA mortgage. Why is relying on the appraisal alone a bad idea? For starters, the FHA and HUD official site makes it very clear that the FHA appraisal is NOT an inspection. “Passing” the FHA appraisal process only | more...

September 9, 2022

Article Update: FHA Appraisal Refunds

By Joe Wallace

Back in 2012, we wrote an article discussing the FHA appraisal process, and whether it’s possible to get a refund from an appraiser if a property is not approved for an FHA mortgage or when the home’s appraised value comes back different than expected. When we addressed this question, which we are asked from time to time, the going advice was that in cases where a buyer disagrees with the outcome of the appraisal, the fee must still be paid. What’s the reality in 2022? When you find a house you want to buy with an FHA home loan, there must be an appraisal. This process is non-negotiable; the appraisal helps to determine the FHA loan amount which is based on the fair market value of the home, not necessarily | more...

September 7, 2022

Article Update: FHA Loan Rules On Late And Missed Payments

By Joe Wallace

Back in 2017, we published an article asking an important question. Is it possible to get an FHA loan application approved with late or missed payments on your credit report? Borrowers can get bogged down with financial difficulty in the best of times. In an economic environment that includes rising gas and utility costs, inflation, and employment woes this threat is greatly elevated. Back in 2017, we didn’t have the pandemic to worry about, but in more recent times this factor has severely complicated many people’s finances. If you get caught up in a struggle with common financial problems you may find some of the simplest situations–we are talking about late and missed payments on your recurring financial obligations–can have the biggest impact on a borrower’s credit rating or perceptions | more...