Articles in Category: Fixed Rate Mortgage

December 29, 2015

FHA Appraisals And The Cost Of Appraiser-Directed Repairs

When it’s time for the FHA appraisal to happen, a borrower may be understandably nervous about the outcome of the appraisal. What happens if the appraiser finds areas that must be corrected or repaired? In many cases those corrections or repairs are directed as a condition of loan approval. In some instances (which would be handled on a case-by-case basis) the repairs may also require a compliance inspection which the borrower would have to pay for. When repairs or corrections are required, can the borrower request that the cost of making those repairs be added to the home loan? According to HUD 4000.1, “A Mortgagee may add repair costs to the sales price before calculating the mortgage amount if: –the repairs are required by the Appraiser to meet HUDs Minimum | more...

December 24, 2015

FHA Appraisal Standards: “Ordinary” Home Purchases Versus Fixer-Uppers

By Joe Wallace

One good question that comes our way in the comments section from time to time involves the difference between an ordinary new home purchase loan or FHA mortgage and the purchase of a fixer-upper with an FHA rehab loan. If appraisal standards for FHA loans include minimum property requirements, how can a fixer-upper be purchased with an FHA mortgage? After all, the nature of a fixer-upper loan is that you take a property that is in need of rehab or repairs and bring it up to standards. How can a fixer upper pass an FHA appraisal? Fortunately, this issue is addressed in HUD 4000.1, which includes the following: “As the on-site representative for the Mortgagee, the Appraiser provides preliminary verification that a Property meets the Property Acceptability Criteria, which includes | more...

December 18, 2015

FHA Loans And Credit Issues: Late Mortgage Payments

By Joe Wallace

In previous blog posts, we’ve discussed the importance of coming to the FHA loan application process with at least 12 months of on-time payments on your credit history. This isn’t just a good idea–it’s critical to your chances for loan approval. Why is this so important? There are two major factors at work when it comes to on-time payments, your lender’s review of your payment history, and especially how your mortgage or housing payments factor into that equation. FHA loan rules in HUD 4000.1 instruct the lender in quite specific ways on how to proceed when reviewing a borrower’s housing payment history. To begin HUD 4000.1 includes a definition for the lender: “Housing Obligation/Mortgage Payment refers to the monthly payment due for rental or Properties owned. A Mortgage Payment is | more...

What if my home was damaged in a natural disaster?

October 30, 2015

HUD 4000.1 On FHA New Construction Loans

By Joe Wallace

When you review your options for an FHA home loan, you’ll run across loan information about FHA mortgages for “existing construction” loans and “new construction” or “under construction” loans. The requirements for new construction versus existing construction may differ due to a variety of reasons including the fact that the borrower can’t always take possession of a new or under construction home right away once the loan has closed. FHA loan rules for existing construction include appraisal requirements that may differ (procedurally) from new construction loans. For these reasons, the FHA has specifically defined what constitutes a new, proposed, or under construction property versus one that is “existing construction”. Existing construction is more or less a home that has already had an owner and has been in existence for a | more...

Can I buy a manufactured home with an FHA loan?

August 28, 2015

FHA Loan Rules, Lender Standards, And Your FHA Loan Application

By Joe Wallace

Some of the most common questions we get asked in the comments section (where we field all our reader questions about FHA loans and refinance loans) involve what seem to be gray areas surrounding an FHA mortgage. For example, “Will a certain condition in the home make the property fail the FHA appraisal?” or, “How low can my FICO score be?” Some portions of the FHA loan process are dealt with specifically in FHA loan rules. For example, borrowers with FICO scores lower than 500 are not eligible for an FHA loan. Borrowers who are currently delinquent on Federal debts may have difficulty getting loan approval until the situation is resolved with payment or a payment plan. Certain types of conditions–homes located within a high pressure gas pipeline easement, for | more...

May 22, 2015

FHA Loan Rules, Bankruptcy, and Short Sales

By Joe Wallace

A reader asks, “My bankruptcy was discharged in August of 2012. We did not reaffirm the mortgage either. One year later I short sales the house (August of 2013 it was sold). The short sale is not on my credit report nor are any missed payments. I was in the process of a mortgage modification when I filed bankruptcy. The firm that I used (which was later investigated by the FTC for mortgage fraud) promised they could take 100,000 off my loan (apparently some things are too good to be true). This under the advice of multiple lawyers I filed bankruptcy.” “I worked w a previous lender who put me threw du (or bu- the underwriting test used by fha). I passed that but he later took the approval back | more...

May 12, 2015

FHA Loan Amounts: A Reader Question

By Joe Wallace

A reader asks, “I have a few General but direct questions about FHA loans or ability to borrow & income status . In my case I have about an income range of 88k- 100k…My Fico Score is presently from 586-597; due to go up to 620 very shortly. My debt to income ratio is in the 25% range or so…Based on that information alone, how much max Loan I could get from FHA loan putting at least 3.5% down 0r 10% down on a house worth 395k or/and 270k.” FHA loan rules do permit lenders to approve a home loan for borrowers with FICO scores in the range mentioned in the reader question, but lender standards also apply. A potential FHA loan applicant should know many lenders are looking for | more...

May 7, 2015

FHA Loans And The Credit Review

By Joe Wallace

We get many questions about FHA loan applications–questions that involve credit, FICO scores, FHA loan standards, and more. Many borrowers aren’t sure about whether they have FICO scores high enough to qualify for an FHA mortgage, and others may wonder if having a history of late or missed payments could hurt their chances at an FHA home loan. In general, borrowers are encouraged to wait to apply for an FHA mortgage until they have 12 full months of on-time payments on all financial obligations. This brings a potential home loan borrower closer to FHA loan approval; anything less can put your loan application in danger. Why? It’s good to know the FHA stance on these issues, and the FHA loan rulebook does spell out the reason why such a premium | more...

May 4, 2015

FHA Loan Rules For Re-Selling: A Reader Question

By Joe Wallace

A reader asks, “I purchased a manufactured home 10 months ago. I tried to sell it to a buyer whose lender told her that I as a seller have to won the home for at least a year before a buyer to use FHA for their loan. Is this a fact?” FHA loan rules do place a partial restriction on how the buyer can sell his or her property that has been purchased with an FHA mortgage loan. This restriction, known as the FHA’s “anti-flipping rule” requires borrowers to wait a minimum of 90 days before selling the property. FHA mortgagee letter 2014-06 spells out these rules, which were amended for a time with a waiver to the anti-flipping rule, but since those days are over a review of the | more...

May 4, 2015

FHA Loans Vs. “Low Interest Loans”: A Reader Question

By Joe Wallace

A reader asks, “Would I apply for a FHA loan if I was looking for a Disability low interest loan? I am trying to find out for my nephew. Were confused by the wording and there seems to be very little information out there surrounding this benefit.” “I am told you need as little as $500 down but cannot find out whether some or all of the closing cost can be financed in the loan. Thank you in advance for your response. He just attended the counseling seminar but no one there was able to answer my questions. I was the only one there seeking this type of loan so maybe there is not as much need to know about this type of loan.” The FHA single-family loan program does | more...