Articles Published in: 2023

Conventional Loan Interest Rates Make History, FHA Loan Rates Still Incredibly Low

June 15, 2023

FHA Loans and Interest Rates: The Interest Rate Lock

Under the rules of the FHA loan program, borrowers and lenders negotiate together on interest rates for the FHA loan. Part of those negotiations is the interest rate lock agreement. This can feel intimidating for some who aren’t used to the home-buying process, but it’s a common part of the home loan transaction. What do you need to know about FHA home loan rates and getting a rate lock commitment from your lender? The FHA does not set interest rates, and it’s also not responsible for regulating them aside from a general requirement that the rates be comparable to similar types of loans. Interest rates on mortgages and other high-value transactions are under more scrutiny in 2023 due to continued elevated mortgage rates. At the moment, it’s good to explore | more...

June 13, 2023

FHA Loan Expenses That Can Be Paid By The Seller

By Joe Wallace

One common question about FHA loans involves whether the seller can pay some of the expenses of the borrower’s FHA loan as a motivation to purchase. Can the seller pay closing costs, offer to supply appliances, or add other incentives to the sales agreement? According to FHA loan rules in the FHA Lender’s Handbook, the answer is yes–but with limitations. According to HUD, “Certain expenses” paid by the seller (or other “interested third parties”) on behalf of the borrower are considered “inducements to purchase” and result in a dollar-for-dollar reduction to the lesser of the sales price or appraised value of the property before applying the appropriate loan-to-value (LTV) factor. That said, sellers can contribute up to six percent of the sales price without a penalty. They can also offer | more...

June 12, 2023

Is Summer The Best Time For House Hunting?

By Joe Wallace

When is the best time of year to search for your new home? Spring and summer are the most comfortable times to look, but those who put up with a little inconvenience from the cold and late-year inclement weather may save more than they realized thanks to a more eager seller. It always pays to look for a home when the buying season is in full swing, but you may have more options than you think by extending your house hunt into fall and winter if necessary. Buying A House During House Hunting Season (Spring and Summer) Yes, the weather is better, potential buyers can take a leisurely look around the property, and the overall experience may be more pleasant. But there is more competition for homes in the good | more...

June 9, 2023

Should You Apply For An FHA Adjustable-Rate Mortgage?

By Joe Wallace

Borrowers considering their FHA mortgage loan options might wonder about an FHA Adjustable Rate Mortgage or FHA ARM loan option instead of an FHA fixed-rate home loan. It is a great idea to compare the features of both types of loan side-by-side to see which might make sense for you. The motivation to do this now has much to do with the interest rate environment we are still dealing with in 2023–in spite of hopes of improvement as the summer wears on. Why would an FHA ARM loan make more sense for some borrowers? Because an ARM offers a lower introductory or teaser interest rate. You may have the option to keep that rate for a full year or as long as ten years. Much will depend on the type | more...

June 8, 2023

FHA Loans And The State Of The Housing Market in 2023

By Joe Wallace

In the last 12 months, many have speculated about the state of the housing market. We all wonder about when an expected recovery might happen and how quickly we can start reaping the benefits. Before we launch into speculation about the future of FHA loan mortgage rates, it’s a good idea to discuss expectations and how to plan ahead for buying your future home. When Is It The Right Time To Buy A Home? Are you in the planning and saving stages of your home loan? If you are, there’s no reason to speed up that process. just because you expect things to improve in the next quarter of 2023. The same is true for those about to move out of the planning and saving part of the process. If | more...

June 6, 2023

Alimony and Child Support: FHA Loan Rules

By Joe Wallace

FHA loan rules permit alimony and child support to be counted as verifiable income for borrowers who receive it and who choose to list it in their income sources. Like all other sources of income, the rules in HUD 4000.1 state the lender is responsible for verifying the income through documentation such as court agreements or other paperwork. Receiving this income can help you qualify for a home loan, but what about FHA loan applicants responsible for paying alimony and child support? Does this count against a borrower’s debt ratio? HUD 4000.1 says yes, lenders must count alimony and child support payments as recurring debts. The FHA loan rule book gives the following instructions to the lender: “For Alimony, if the Borrowers income was not reduced by the amount of | more...

June 5, 2023

HUD Takes Action To End Appraisal Bias

By Joe Wallace

The Department of Housing and Urban Development is acting against bias in the appraisal system. “Owning a home provides a path to the American dream. Yet, that dream has been deferred for Black and Brown people, as we have consistently had our homes under-valued,” according to HUD Secretary Marcia L. Fudge, quoted in the 1 June 2023 HUD press release on these appraisal reforms. Fudge adds, “Having your home undervalued is bigger than just a number on a page. It can be the difference between getting a loan and not – between having enough money for retirement or not.” According to Fudge, the PAVE Task Force is a project meant to focus on “taking bold action to address appraisal bias – and renewing our commitment to doing everything in our | more...

June 2, 2023

FHA Home Loan Pre-Approval And Mortgage Loan Approval

By Bruce Reichstein

If you are considering an FHA home loan it is a smart idea to get pre-approved for a home loan before you start house hunting. If you are new to the home loan process, you might not be sure what the difference is between FHA loan approval and getting pre-approved for an FHA mortgage. What is that difference? Getting through the initial pre-approval application does not mean you’ve been fully approved for the mortgage. But it IS an important tool for soon-to-be homeowners. Home loan pre-approval is a tool for both borrower and 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. Think of pre-approval as the start of the loan process, but | more...

June 1, 2023

Buying Your First Home With An FHA Mortgage

By Joe Wallace

If you’re thinking about buying your very first home and you want to save money on your down payment, an FHA mortgage is an option to consider because of the minimum 3.5% down payment. FHA loans have more forgiving credit requirements than some conventional loans, and the interest rates are traditionally lower than conventional mortgages. Perks of an FHA Mortgage: Pay Off Your Home Early Without Penalty The lender cannot legally charge a penalty for an early payoff of your FHA loan. You can pay extra on your mortgage, make extra payments, refinance the loan, or sell the property to pay it off earlier than scheduled. FHA Loan FICO Score Requirements in 2023 FHA minimum FICO score requirements say you must have a FICO score of 580 or better to | more...

May 30, 2023

FHA Home Loan Down Payment Rules in 2023

By Joe Wallace

What must you know about the down payment requirement for an FHA mortgage? FHA home loans have specific rules about the amount of your down payment and where it can come from. Knowing the down payment rules before you start saving for your home loan may make the entire process more efficient, especially if you know you’re required to give the lender the sources of your down payment money and document it accordingly. FHA Loan Rules: Down Payments Are Different From Other FHA Loan Costs Some want to know if their down payment requirement can include the money they pay toward closing costs, lender fees, or earnest money. But such costs do not count as part of your down payment amount; you must provide funds for your entire down payment | more...