Articles Published in: April 2023

April 28, 2023

How Much Is Your FHA Mortgage Payment?

Are you new to house hunting? If you have never applied for a home loan before it’s understandable that you might view a mortgage payment as a simple calculation involving the principal and interest multiplied by the number of mortgage payments you have to make. But principal and interest are only two factors that influence how large your monthly mortgage obligation is. FHA Mortgage Insurance Premiums and UpFront Mortgage Insurance Premiums Your FHA mortgage insurance premiums can change how much you pay each month for the home loan. Did you choose to finance the FHA Up-Front Mortgage Insurance Premium or UFMIP? If so, expect an increase in your monthly mortgage costs. Property Taxes Property taxes are part of owning a home, and once you get used to paying them it | more...

How much can I borrow with an FHA refinance loan?

April 27, 2023

UFMIP: FHA Loan Rules

By Joe Wallace

If you are a first-time borrower with questions regarding funding fees like the FHA Mortgage Insurance Premiums (MIP) and Up Front Mortgage Insurance Premiums (UFMIP), you are not alone. Many newcomers to the home loan process are confused by these fees (at first) but there are simple answers for most of these borrower questions. For FHA Single-Family mortgages, the rules for the Up Front Mortgage Insurance Premium are found in HUD 4000.1, starting with the explanation of both UFMIP and MIP: “FHA collects a one-time Upfront Mortgage Insurance Premium (UFMIP) and an annual insurance premium, also referred to as the periodic or monthly MIP, which is collected in monthly installments.” Some borrowers wonder if you can finance the UFMIP and how doing so might affect the amount of the mortgage | more...

April 26, 2023

FHA Loan Pre-Approval

By Bruce Reichstein

What is the difference between FHA loan approval and pre-approval for an FHA mortgage? Some borrowers get confused during the initial process because it’s easy to assume that getting through pre-approval means you’ve been fully approved for the mortgage. The reality is that pre-approval is a tool for the borrower and the lender to determine if you’re ready to buy based on your income, debt-to-income ratio levels, the amount of down payment you have saved, etc. It’s the start of the loan process, but it is not a guarantee that you have an FHA mortgage loan yet. Getting pre-approved for an FHA mortgage means using an online mortgage loan calculator or other tool to add up your income, debts, interest rate, etc. The price of the home or an estimated | more...

April 24, 2023

FHA Loan FICO Score Rules

By Joe Wallace

FICO scores play an important part in any home loan application. There is often confusion about FICO scores, with some applicants assuming that only FICO scores determine loan approval, while others wrongly assume they only have one credit score. What’s the reality? There are three major credit reporting agencies; Equifax, TransUnion, Experian. A borrower may actually have three different scores and the information on one credit report may not be the same on the others, depending on circumstances. That is one reason why lenders encourage borrowers to check their credit reports as early as possible before applying for an FHA mortgage. One credit report could have discrepancies another does not reflect, etc. A borrower should always know what the lender will see on the report before completing the application. FICO | more...

April 21, 2023

The FHA Section 203(k) Rehab Loan

By Joe Wallace

The FHA 203(k) rehab loan is an important FHA mortgage loan option you should know about–this loan is available as a new purchase loan or a refinance loan you can use to buy and rehab a home at the same time. According to the FHA official site, on a page about the 203(k) rehab loan program, we learn that the 203(k) is aimed at borrowers who need to buy and improve or refinance and improve an eligible property. “When buying a house that needs repair or modernization, homebuyers usually have to follow a complicated and costly process. The interim acquisition and improvement loans often have relatively high interest rates, short repayment terms and a balloon payment.” The FHA says its possible to use 203(k) Rehab loans to save time and | more...

April 20, 2023

Five Things You Should Know About FHA Mortgages

By Joe Wallace

Many people still have misconceptions about the FHA home loan program. They might think they “earn too much money” to be a successful applicant (not true, FHA home loans are not need-based loans) or would not qualify because they want to build a home instead of buying an existing-construction house. This is also not true; FHA loans include those for building a home instead of buying one. They are called One-Time Close construction loans, and feature the same FHA FICO score and down payment requirements as other FHA mortgage options. What are the facts about FHA home loans you need to know to make a better-informed decision about your loan choices? FHA Loan Fact: FHA Mortgages Are For Any Financially Qualified Borrower Unlike the USDA home loan program, which DOES | more...

April 19, 2023

FHA Home Loan Pre-Approval: Issues To Consider

By Joe Wallace

Getting mortgage pre-approval is an important step in the home buyer journey. It indicates to the seller and a lender that you are serious about your home loan and ready to commit to the right property and price. So what should you know about mortgage pre-approval before you apply? Before you start filling out the forms to get pre-approved, there are some basic questions to ask yourself. Getting pre-approved for an FHA home loan means asking yourself how good your credit score is and how high your credit card balances are. It also means looking at your savings and how much you will need to come up with to meet FHA minimum downpayment requirements. It’s best to start asking these questions far in advance of your home loan so that | more...

April 17, 2023

Understanding Your FHA Home Loan Options

By Bruce Reichstein

Understanding your FHA home loan options going into the house hunting season of 2023 means knowing the different choices available to you for a mortgage. Did you know that FHA home loans are available for mobile homes, condos, and manufactured housing? There are many options for property size and type. You can buy a property up to four units large using an FHA mortgage. What Kind Of Home Do You Need? Choices matter when reviewing your home loan options. Choices that include how many units you want in your home (one to four-unit homes can be purchased with FHA mortgages) and the type of property you want; condo units, townhouses, mobile homes, manufactured housing, and even the ability to build instead of buy can be part of your decision-making process. | more...

April 14, 2023

Buying Your First Home With An FHA Mortgage

By Joe Wallace

First-time home buyers love hearing about the low down payment requirements for FHA mortgages, and the fact that FHA home loans allow you to apply for a mortgage with a government-guarantee that helps keep mortgage loan interest rates lower on these types of loans. But some other perks aren’t so obvious; did you know that with an FHA mortgage you are permitted to have your seller contribute up to six percent of the home’s price as closing costs? The seller can’t contribute to your down payment but can help with those closing costs. Your ability to use this option may be limited in housing markets where there’s a lot of competition for a small amount of housing inventory, but when there is less competition for individual houses, your ability to | more...

April 13, 2023

FHA Loans and Escrow Accounts

By Joe Wallace

When buying a home, there are situations where the FHA home loan transaction requires an escrow account. HUD 4000.1 has a specific list of rules and regulations that govern escrow and how it is to be used for purchasing or building a home. There are many scenarios where the lender will require an escrow account. A construction loan is a great example; you won’t be able to build a home without one. In general, when escrow is used, we learn the following from the FHA Single-Family Lender’s Handbook, HUD 4000.1: “The Mortgagee must collect a monthly amount from the Borrower that will enable it to pay all escrow obligations…” The escrow account must have sufficient funds for items including but not limited to the following: For repair completion, escrow rules | more...