Articles Published in: 2023

FHA Home Loans And The Biggest Credit Mistake You Can Make

September 18, 2023

No Down Payment FHA Loans?

Are there no down payment FHA loans? Some borrowers feel the pinch when trying to save up for closing costs, inspections, and the required minimum investment FHA loan guidelines say are mandatory for most FHA loans. They often wonder if there is a no-downpayment option when applying for an FHA mortgage. Making a down payment is an important and mandatory part of the FHA loan process, and you won’t be allowed to sidestep this requirement. That said, there is an exception for FHA 203(h) rehabilitation mortgages, but those are reserved for victims of natural disasters in federally declared disaster areas. Why do some people mistakenly believe FHA home loans are available for no money down? Partially because they are mistaking FHA loans for the VA home loan program, which offers | more...

September 15, 2023

What You Should Know About FHA Energy Efficient Mortgages

By Bruce Reichstein

The FHA Energy Efficient Mortgage (EEM) loan program was started back in 1992 as a pilot program in five states. A few years later, the program was expanded nationwide. According to the FHA official site: “EEM is one of many FHA programs that insure mortgage loans–and thus encourage lenders to make mortgage credit available to borrowers who would not otherwise qualify for conventional loans on affordable terms (such as first-time homebuyers) and to residents of disadvantaged neighborhoods (where mortgages may be hard to get).” Borrowers who use FHA loans can add the required FHA upfront mortgage insurance premium to their home loan or pay in cash at closing. There is a monthly premium paid as part of the monthly mortgage payment. The FHA EEM is an add-on to a standard | more...

September 13, 2023

Tips You Should Know About FHA Loan Down Payments

By Joe Wallace

Down payment issues may vary depending on the home loan you select, whether it is an FHA loan, a VA mortgage, or a USDA construction loan, but some things are common for all mortgages where down payment money goes. Do You Need A Down Payment Gift? Get It In Writing A participating FHA lender can accept down payment gift funds from a variety of sources. The money can come from family, friends, and employers. But these gift-givers must also provide a letter detailing where the cash comes from and that it does not come from unapproved sources, which we will explore below. The down payment gift letter must explain where the money is from, such as cash saved at home, investments that have been cashed in for the gift, or | more...

September 12, 2023

Do You Want To Buy A House This Year?

By Joe Wallace

Do you want to buy a house this year? There is still time in 2023 to take advantage of the lower FHA loan limits set at the beginning of the new year. There are also things you should do to prepare for the loan, and it’s a very good idea to give yourself extra time to get it all done. It’s best to come to the application process with the following steps already accomplished. Check Your Credit Report Start reviewing your FICO scores and details to make sure there are no errors, identity theft, outdated information, etc. You are legally entitled to a free credit report. Contact Experian, Equifax, and TransUnion to learn more about contesting errors or other issues on your credit reports. Use A Mortgage Calculator An online | more...

September 11, 2023

Things You Can Do With An FHA Mortgage

By Joe Wallace

What can you buy with an FHA mortgage? First-time home buyers and experienced home buyers who have never used an FHA mortgage sometimes wonder whether they can use an FHA loan to buy certain property types. We examine some of these issues below. Remember that state law, local ordinances, and FHA loan rules may change over time, it’s best to reexamine the rules before you start your house-hunting phase of the journey. Use An FHA Loan To Buy A Multi-Unit House One permitted use of an FHA home loan program is buying a multi-unit property. You can use an FHA mortgage to buy a house with as many as four living units. Use An FHA Loan To Buy A Multi-Unit Rental Property This is allowed by FHA loan rules. The | more...

September 8, 2023

Buying A Home With A Refinance Strategy

By Joe Wallace

For some, buying a home in 2023 is a bad idea. At least, that is the impression some get when looking at today’s high interest rates in the third quarter of the year. Some compare these numbers to the rates available a year or two ago and wonder why they should consider buying a house in today’s market. Saying no to an FHA home loan in these circumstances could be the right answer for those without a refinance strategy to help them get out of today’s higher rates as soon as lower interest rates are offered consistently. But what about those who think long-term and have a strategy to refinance their home loan as soon as it’s feasible? FHA Loans And Housing Market Competition Major news outlets reported mortgage loan | more...

September 7, 2023

Preparing For An FHA Home Loan

By Joe Wallace

We get a lot of questions about preparing for an FHA loan. Some of the most popular topics? Credit scores, what it takes to get loan approval, and whether it’s good to wait out the current high interest rates we are experiencing at press time in the fall of 2023. There are many sources of credit advice, especially advice on how to prepare your credit ahead of a major application like an FHA mortgage. But what do the credit agencies themselves say about how to become more creditworthy ahead of a home loan application? How should you prepare? Improve Your Chances At Home Loan Approval There is some interesting advice from one of the “big three” credit reporting agencies, Experian. That credit agency recommends you start as early as possible, | more...

September 5, 2023

FHA Home Loans And High Interest Rates

By Joe Wallace

Interest rates on FHA home loans, VA mortgages, and conventional equivalents are higher in 2023. Consider the rates listed in the first five days of September, when the numbers reflected rates between 6% and 7.6%. Those numbers are a serious increase from the record-setting interest rate days of 2020. Looking at just one day, 16 September 2020, we learn home loan interest rates were listed below 3% for qualified applicants. Despite the higher numbers we see in the fall of 2023, some borrowers will not wait for rates to come down. Instead, these borrowers are applying, getting approved, and buying now regardless of rates. Why do some choose to buy now? Are they taking foolish risks with their money? Not in all cases. Some borrowers enter the house-hunting process with | more...

September 1, 2023

How Much Should I Save For My FHA Loan Down Payment?

By Joe Wallace

How much money should a home buyer save for a down payment? The answer can’t be given in dollars and cents because the amount of your down payment depends on the purchase price of the home in part, you’ll need to know the sale price before you can calculate the down payment amount. The percentage of the down payment (based on the price of the home) depends on the type of home loan you want, whether you want to avoid mortgage insurance, and whether your FICO scores are high enough to qualify for the lowest down payment. Some down payment percentages are higher than others for various reasons including risk to the lender in some cases. Down Payments For VA Mortgages VA loans offer a no-money-down option, but there is a | more...

August 31, 2023

FHA Home Loan Rules And Fair Housing Laws

By Bruce Reichstein

We report on Fair Housing cases from time to time, a reminder to those looking for housing that there are federal laws that protect against discrimination in housing. But what are the FHA home loan rules in this area? Did you know that the FHA loan program has specific instructions to the lender regarding Fair Housing laws? Those instructions are found in HUD 4000.1, the FHA Single-Family Home Loan Handbook. Page 120 of that handbook instructs the lender, “The Mortgagee is required to comply with all federal, state and local laws, rules, and requirements applicable to the mortgage transaction, including all applicable disclosure requirements and the requirements of the Consumer Financial Protection Bureau (CFPB), including those related to: The Fair Housing Act protects both renters and home loan applicants looking | more...