Articles by: Bruce Reichstein

September 15, 2023

What You Should Know About FHA Energy Efficient Mortgages

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...

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...

August 22, 2023

How Much Will My FHA Appraisal Cost?

By Bruce Reichstein

How much does an FHA appraisal cost? This is a common question, most often asked in conjunction with whether or not the FHA regulates this expense as part of the FHA home loan process. The Cost Of FHA Appraisals And Home Inspections The first thing to remember when budgeting for an FHA appraisal is that you must also set aside money for a home inspection. You should never rely on the appraisal alone to determine whether the home, condo unit, or mobile home or modular home is suitable to purchase. The FHA appraisal costs money, and the home inspection costs money too. Borrowers who balk at paying “twice” for a service that is mistakenly viewed as nearly identical (appraisals are NOT identical to inspections) should know that paying hundreds for | more...

July 28, 2023

FHA Rehab Loans Versus FHA 203(b) Loans

By Bruce Reichstein

When shopping for real estate, most borrowers are thinking of the kind of mortgage such as the one known as an FHA 203(b). That’s the loan you want when shopping for a house you want to buy as-is; one that meets FHA appraisal standards and requires little to no work on the property to make it eligible for a 203(b) forward mortgage. Then there is another type of home loan option available to FHA borrowers; the FHA 203(k) rehabilitation mortgage, which allows you to buy a fixer-upper and have it brought up to FHA appraisal standards and local code requirements. The FHA 203(k) rehab loan is suitable for both new purchase and refinance applications. Regardless of whether you buy or refinance with an FHA Rehab Loan, you are permitted to | more...

July 25, 2023

Which FHA Loan Is Right For You?

By Bruce Reichstein

There are some home loan options some won’t consider. A shorter loan term is one. In an era where lower monthly payments seem to be the priority for some borrowers more than saving money over the entire course of the loan, a longer loan term makes sense. But for some, these are essential aspects of the loan to consider. If you can afford to pay more each month on your mortgage, would you do so to shorten your loan term? FHA Condo Loans, FHA Manufactured Homes Are you surprised there are separate FHA loans for each property type listed above? These different loans are needed simply because each property type’s considerations differ. Manufactured homes can’t be older than regulations allow, but existing construction homes don’t have the same rule. Condo | more...

July 13, 2023

FHA Loan Approval and Late or Missed Housing Payments

By Bruce Reichstein

What is the connection between FHA loan approval and late or missed housing payments? The simplest formula given to most borrowers is that you should come to the home loan application process with nothing but on-time payments on all financial obligations for the last 12 months leading up to the day you apply. Not all borrowers take that advice, and many want to know what the consequences of having a late or missed payment might be; in some cases the issue may be more problematic than others. This is true of having late or missed housing payments on your record. The lender will review your record of housing payments as one of the indications that a borrower is a satisfactory credit risk. But what do the FHA loan rules tell | more...

July 3, 2023

Can An Eligible Veteran Build on Their Own Lot or Buy Land with a VA loan?

By Bruce Reichstein

If you are interested in purchasing a piece of land and financing it through a VA-approved lender, there are several loan options available for you. While a standalone VA land loan is not offered, the VA loan program does allow for the purchase of land when combined with the construction costs to build a new home. This loan product is known as a VA One-Time Close construction to permanent loan. It is a convenient loan option that includes the cost of the land plus the cost of the construction and even allows any VA funding fee to be financed into the loan. This Zero out-of-pocket financing allows eligible Veterans to have a true $0 down loan. To utilize the VA loan for buying land and constructing a new home, | 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...

May 19, 2023

FHA Loans and Your Credit

By Bruce Reichstein

Lots of people want to know what credit issues will affect the approval of FHA loans. The shortest answer is that it’s a combination of FICO scores, your repayment habits on all financial obligations (not just credit cards or revolving debt), and the amount of debt you pay on each month versus how much income you have. But there are some hard numbers to look at, too. FHA minimum requirements for credit include FICO score requirements for maximum financing. If your FICO scores are 580 or above, you technically qualify for maximum financing, which means only a 3.5% down payment. But FHA FICO minimums are not the only FICO score requirements you’ll need to meet. Credit requirements at your chosen lender can be, and often are, higher. You may find | more...

May 9, 2023

FHA 203(k) Rehab Loan Standards

By Bruce Reichstein

FHA 203(k) rehab loan standards include a list of things that can be done with a 203(k) rehab loan and a list of ineligible projects. Borrowers should know what is allowed and what is not with these FHA rehab loans. FHA Loan Rules For Renovation, Improvements, Add-Ons In general, FHA home loan programs such as the Energy Efficient Mortgage (which can be used in conjunction with an FHA 203(k) loan) and the FHA 203(k) and FHA 203(h) rehab loan feature a list of approved uses for loan proceeds. There’s a prohibition against cash back to the borrower on these transactions except where it is needed to pay for materials and labor; even then a borrower cannot “profit” from the loan by taking excess funds in cash. FHA loan rules require | more...