Articles Published in: 2022

August 8, 2022

What To Ask About FHA Refinance Loans

Getting ready to refinance? Even if you are considering using the same lender that you got your mortgage from originally, there are some important questions to ask your loan officer about the refinance transaction. Do you know how much your loan will cost? Do you understand the differences between a simple refinance, an FHA Streamline refi loan, and other types of mortgages? Find out more today and get ready to find the best deal for your needs. FHA Refinance Loan Questions: How Much Will My Loan Cost? In the earliest stages of the refinance loan process, don’t expect to get exact figures, but do ask your loan officer for estimates based on the typical set of costs for the refinance loan you need. You may not be charged identical costs | more...

August 5, 2022

FHA 203(k) Rehabilitation Mortgages Compared To FHA One-Time Close Mortgages

By Joe Wallace

Some borrowers want to know if there are any differences between a one-time close construction loan and an FHA 203(k) Rehabilitation Loan. While both of these loans have some features in common, the short answer is that they are not interchangeable and each loan has a specific purpose. Both types have one loan application and a sinlge loan closing date. Rehab loans and construction loans both use escrow to facilitate the payment of loan funds to contractors, and participating lenders may require the borrower to typically credit-qualify with FICO scores typically in the mid-600s for either type of mortgage. FHA 203(k) Rehabilitation Mortgages are offered as either a refinance or a purchase loan. An FHA One-Time Close construction loan is a forward mortgage. You would want to use an FHA | more...

August 3, 2022

Appraisal Rules For FHA Loans: Basements & Crawlspaces

By Joe Wallace

When reviewing your closing checklist or simply trying to plan for all the expenses of your FHA home loan, the appraisal and the optional (but vital) home inspection are two of the expenses you’ll need to save for. The appraisal is required as a condition of loan approval, the inspection is optional but borrowers cannot make a truly informed decision about a home without the inspection. When it comes to FHA appraisal requirements, the rules are designed only to insure the property meets MINIMUM FHA standards. The appraisal is never to be taken as a message from the FHA that the home is free of defects or problems-only an home inspection can tell you what the true condition of the property might be. FHA minimum standards for appraisals include requirements | more...

August 1, 2022

Article Update: FHA Appraisal Rules On Peeling Paint

By Joe Wallace

In 2019 we wrote an article discussing a common reader question about FHA home loans. Can the presence of peeling paint be enough to cause a problem in the FHA appraisal process? In our original article, we noted that this can be a major issue for homes built before the lead paint ban which took effect in the 1970s. In some situations, borrowers want to know why the appraiser reviewed the home and required a correction of a peeling paint issue as a condition of loan approval. The age of the home plays a big part in that decision to require a correction. If the house was built before 1978, that peeling paint is NOT just a cosmetic issue. FHA home loan rules since our original article in 2019 still | more...

July 29, 2022

FHA Home Loans And Occupancy: What You Can And Cannot Do

By Joe Wallace

If you are buying an existing construction home with an FHA mortgage, or having one built for you using an FHA One-Time Close construction loan, you will notice some common requirements for these mortgages; one such requirement involves the borrower’s use of the property once the loan has closed. FHA new purchase mortgages, also known as forward mortgages, are intended for those who wish to occupy the home as their main address, or “primary residence”. Some borrowers may be confused by this requirement because they assume you can buy and rent out a home using an FHA mortgage without intending to occupy it. But the reality is that FHA mortgages actually require occupancy by at least one person obligated on the home loan, so how is it possible to purchase | more...

July 28, 2022

Article Update: Do Townhouses Qualify For FHA Loans?

By Joe Wallace

Back in 2018, we published an article about the FHA home loan rules for townhouses. Do they qualify for FHA home loans? One source defines a townhouse as: “…multi-floor homes that share one- to two walls with adjacent properties” but which feature separate entrances for each property. What do the FHA home loan rules say about purchasing townhomes with an FHA mortgage? FHA Loan Rules For Property Eligibility The FHA Single Family Home Loan rule book, HUD 4000.1, has seen some important changes since we wrote the original article in 2018 but in 2022 it still says the following property types may be purchased with an FHA mortgage: -detached or semi-detached dwellings -Manufactured Housing -townhouses or row houses -individual units within FHA-approved Condominium Projects As you can see from the | more...

July 26, 2022

HUD Announces Results Of New York Fair Housing Case

By Joe Wallace

Any form of discrimination in the housing process whether buying or renting has a chilling effect on the entire housing industry. We write about Fair Housing Act cases frequently to remind house hunters of their rights under the law. One of the latest developments in this area involves the Department of Housing and Urban Development’s involvement in a Fair Housing Act case in Long Island, New York. HUD announced in July 2022 that an Administrative Law Judge delivered a decision finding Long Island landlord Alex Raimos guilty of violating the Fair Housing Act, ordering Raimos to pay some $70 thousand in penalties and damages. This Fair Housing case began because the landlord refused to rent “to a mother and her daughter because of the daughter’s cerebral palsy” according to a | more...

July 25, 2022

Article Update: What Are The FHA Loan Requirements For Wells and Septic Systems?

By Joe Wallace

In 2017, we published an article that asked an important question: what are the FHA requirements for sewer/septic systems? As we discussed back then, there are important issues to consider if the property you want to buy with an FHA mortgage can’t be hooked up to a local utility. Our 2017 article asked an important question: what are the FHA requirements for sewer/septic systems? For example, the placement of the septic tank; back then, we reported FHA loan rules required the tank to be at least 50 feet from any well on the property. In 2022, those rules have not changed. And wells must be a proscribed distance from other features of the property including: Property line: 10 feet Septic tank: 50 feet Drain field: 100 feet Septic tank drain | more...

July 22, 2022

What Is An FHA Loan Limit?

By Bruce Reichstein

What is an FHA loan limit? The answer to this question can be found in HUD 4000.1, the FHA Single-Family Lender’s handbook, which begins by explaining: “A Mortgage that is to be insured by FHA cannot exceed the Nationwide Mortgage Limits, the nationwide area mortgage limit, or the maximum Loan-to-Value (LTV) ratio. The maximum LTV ratios vary depending upon the type of Borrower, type of transaction (purchase or refinance), program type, and stage of construction.” Furthermore, the handbook says that for most FHA loan programs the maximum mortgage is either the Nationwide Mortgage Limit for that area or “a percentage of the Adjusted Value”. The handbook breaks down how a home’s adjusted value is calculated, according to transaction. For new purchases or “forward mortgages”, the FHA Lender’s Handbook states: “For | more...

July 20, 2022

What To Think About When Comparing FHA Lenders

By Joe Wallace

Why do we say it’s so important to choose the right lender for your FHA home loan? Because no two financial institutions are exactly alike, and you may find a lender willing to offer the type of mortgage you need at an affordable interest rate. But until you compare offers how do you know you have set your price point and target interest rate realistically? It’s not just whether the lender offers the type of FHA mortgage you need–such as an FHA condo loan or an FHA One-Time Close Construction mortgage. It’s also whether the lender is offering you a competitive interest rate. When rates trend higher, does your selected loan officer reprice the interest rates or up the closing costs instead? If you don’t know, you won’t know how | more...