Articles by: Bruce Reichstein

July 22, 2022

What Is An FHA Loan Limit?

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 6, 2022

VA One-Time Close Construction Loan Options for Military Veterans Expanded

By Bruce Reichstein

Some house hunters get fed up with looking for just the right home, while others start out their home loan journey knowing in advance they want a house built for them. What options do these borrowers have? There is an FHA home loan known as the FHA One-Time Close / Single-Close construction loan that lets borrowers apply for a single loan that covers both construction costs and the mortgage itself. The FHA version of this type of construction loan requires the borrower and lender to work together to establish a plan for the project including estimated completion times, interest rates, budgets, and more. Some borrowers aren’t interested in FHA home loans since they have other options; do qualifying military veterans have a VA loan version of the FHA One Time | more...

July 1, 2022

First-Time Home Buyer Tips

By Bruce Reichstein

What does a first-time home buyer need to know when searching for real estate to buy with an FHA mortgage? It’s good to make a checklist before you start and add to it along the way-there are some important things to do before you ever fill out home loan paperwork. Decide If You Are Going To Use A Real Estate Agent Whether you buy your home with an FHA mortgage or not, this is a choice that could make a difference in terms of saving time looking for just the right home. If you choose to use the services of a real estate agent, be sure to include a list of features you want in your home and features you do not want-the agent will help you narrow the field. | more...

One Time Close Mortgage Loans: The Base Home Sales Price

June 23, 2022

Why Choose An FHA Construction Loan?

By Bruce Reichstein

If you want to build a home on your own lot or on land you buy in conjunction with the project, you have two basic options to choose from. There is a type of construction loan that features two applications and two closing dates. One is a loan to pay for the labor and materials in the construction of the property itself. Once the construction phase is over, the borrower applies for a second loan that pays off the construction loan and serves as the mortgage. It is important to remember that the loan for building your house is not a 30-year mortgage. If you want to build a custom home this way, the first loan is sometimes called an interim loan with the second being referred to in the | more...

June 20, 2022

Celebrating Juneteenth

By Bruce Reichstein

Juneteenth is the newest federal holiday in the United States. Today, we commemorate the emancipation of enslaved African Americans–an event formalized in Texas on the day General Order 3 was issued by Union Army General Gordon Granger. That order announced freedom for enslaved people in the State of Texas on June 19, 1865. The actual day, June 19th, is celebrated along with a formal holiday observation of Juneteenth held on Monday, June 20, 2022 with banks, financial markets, post officers, and schools closing in honor of the day. We too pause our usual discussions of all things related to FHA loans to observe Juneteenth. Thank you for reading and our regular posting schedule returns tomorrow.

June 14, 2022

Things To Look For When Buying A House With An FHA Mortgage

By Bruce Reichstein

Finding the right home to buy with an FHA home loan can be challenging. If you are a first-time home buyer, do you feel intimidated about making a decision on the size and configuration of the house you want to buy? You are not alone. Fortunately, you can help yourself in this process by making a checklist of features and priorities you can refer to when reviewing each property. This can be a better approach than trying to do it all from memory; you won’t forget to ask the seller or real estate agent about something important if you have it written down in front of you when you take the tour. What To Look For When Buying A Home With An FHA Mortgage: Overall Size That sounds fairly obvious | more...

June 10, 2022

FHA Loans: Calculating The Monthly Mortgage Payment

By Bruce Reichstein

One of the most important questions a home loan applicant can ask is, “How much will my monthly mortgage payment be?” While this may seem to be a simple calculation of how much the loan is, divided by how many months the mortgage loan payments are required, the truth is that it’s more complex than that. Mortgage loan applicants have a variety of online mortgage calculators to help them arrive at estimates, but what actually goes into the calculation of your monthly mortgage payment? If it’s not a simple matter of taking the loan amount and dividing it by the number of months the loan term is set for, what DOES go into those calculations? There are a variety of things. The basic calculation we mention is part of it, | more...

May 26, 2022

What You Should Know About Using An Escrow Account For Your FHA Loan

By Bruce Reichstein

Are you planning to buy a home? Whether you seek an FHA mortgage or not, you may be required to use an escrow account for the loan transaction. You will need a safe place to deposit earnest money in the buying phase and you may also need escrow to pay your property taxes each year. FHA Loans Require Escrow Your participating FHA lender may require the use of an escrow account. Are you applying for an FHA 203(k) Rehabilitation Loan or an FHA One-Time Close Construction loan? Both types of mortgages require payments to contractors who are renovating or constructing your home. FHA loan funds must be stored in escrow until it’s time to use them. There is no unrestricted cash back to the borrower with these loans, so escrow | more...

Home Loans For Building On Your Own Land

May 24, 2022

Building Your Home Instead Of Buying Someone Else’s House

By Bruce Reichstein

If you want to build your home from the ground up on your own lot, you have plenty of options, starting with a choice between a construction loan with two applications, two loans, and two closing dates and a loan that only has a single application, one loan, and one closing date. The loans that require only one application and closing date are known as One-Time Close construction mortgages. They are also known as construction-to-permanent mortgages. The loans that require two of everything are simply known as construction-only loans and you must apply for the mortgage loan separately from the construction loan. What are the basic benefits of choosing a One-Time Close loan aside from the obvious? Your ability to have single loan approval and one closing date are important. | more...

May 13, 2022

Reasons To Refinance With An FHA Mortgage In 2022

By Bruce Reichstein

There are many reasons to consider refinancing a home loan with an FHA mortgage. Some aren’t as attractive in times when interest rates are moving higher, and others may require a refinance no matter what the rates are doing. Recovering from financial or natural disasters can bring a homeowner back to the lender to discuss options for saving a home through refinancing as one possible option. In the spring of 2022 when inflation and other issues contributed to rising interest rates, cash-out refinancing may not be on the table in the minds of those worried about a continued rise in rates. But some homeowners affected by the pandemic who are struggling to make their mortgage payments or struggling to keep up due to the long-term financial effects of COVID-19 on | more...