Articles in Category: FHA Loan Types

April 7, 2017

FHA Loan Rules: Borrowers, Co-Borrowers, Co-Signers

Do you know what the FHA loan rules are for borrowers, co-borrowers, and/or co-signers? What are the requirements for each and how is your lender required to proceed with each? The FHA home loan rule book for single family mortgages, reverse mortgages, and refinance loans is HUD 4000.1 It instructs the lender that borrowers have an occupancy requirement-the borrower must agree to take ownership of the home and use it as her or his primary residence after loan closing. Usually the borrower will have to move in within 60 days of closing. HUD 4000.1 also tells the lender that borrowers may only purchase homes with FHA loans within the United States or its’ territories. Purchase of non-U.S. real estate is not permitted with an FHA mortgage. All parties to be | more...

April 6, 2017

Credit Report Data, Disputed Accounts, and FHA Loans

By Joe Wallace

Borrowers are often advised to give themselves plenty of time in the pre-purchase planning stages to review credit report details to make sure there are no errors or outdated information. What happens if a borrower does see something on a credit report and chooses to dispute it? Ideally, issues like these should be caught very early in the planning stages. You should check your credit report as early as one year prior to the home loan application in order to give yourself enough time to dispute items if required. But not all borrowers have that much time to deal with such issues, and FHA loan rules address disputed accounts in detail. HUD 4000.1, the FHA single family home loan rule book, has two sections on disputed accounts-one for derogatory credit | more...

April 6, 2017

Pre-Foreclosure Sales and New FHA Loans

By Joe Wallace

Many potential FHA borrowers want to know how long they must wait following pre-foreclosure sales in order to successfully apply for a new mortgage. There is a specified “seasoning period” (industry jargon for the amount of required waiting time following pre-foreclosure sales) required of borrowers after a short sale, bankruptcy filing, etc. The amount of that required waiting time will vary based on a number of factors including lender standards, so borrowers should keep in mind that the FHA loan rules we’re about to mention are only one of the sets of rules that must be followed for such transactions. That said, HUD 4000.1 instructs the lender on how to proceed in these cases, beginning with a definition of pre-foreclosure sales: “Pre-Foreclosure Sales, also known as Short Sales, refer to | more...

April 4, 2017

Mortgage Loan Interest Rate Trends: Sharply Lower

By Joe Wallace

Since our last report, mortgage loan interest rates have fallen sharply. Market watchers give at least some of the credit for this to bond market activity, and following a recent persistent upward trend any improvement is a welcome step in the right direction. From Wednesday on, there are a variety of scheduled economic data releases and other events that could (and historically, have) be influential in the continued downward trend. Of course, these scheduled events could also have the opposite effect on mortgage loan rates, so industry professionals will likely be paying individual attention to each of these until week’s end. 30-year fixed rate conventional mortgage loan interest rates were reported at a best execution 4.125%, down from last week’s 4.25%. The big changes are in FHA mortgage loan rates | more...

FHA Loans And Natural Disasters: What You Should Know

March 31, 2017

FHA Appraisal Rules: When Corrections Are Required

By Joe Wallace

The FHA appraisal process is a typical part of purchasing a home. The appraisal establishes the fair market value of the property and also insures the home meets minimum FHA loan standards. These standards are know as MPS and MPRs-Minimum Property Standards and Minimum Property Requirements, respectively. While the FHA appraisal is not designed to catch any/all problems with a home, it is a tool for the lender to use to determine whether the property is acceptable or not. Whether you’re applying for a fixed rate mortgage or adjustable rate loan, purchasing a condo, town home, or manufactured home, each transaction is subject to the FHA appraisal process. What happens if the appraiser reviews the property only to find issues that do not meet FHA minimum standards? The answer is | more...

March 30, 2017

Mortgage Rate Trends: Moving Lower

By Joe Wallace

Since our last mortgage rate report, the overall trend has been downward in the short-term. Over the past several business days we have seen rates see-saw back and forth within a certain range, but at the time of this writing, rates are lower than when we reported on them last. 30-year fixed rate mortgages are at 4.25%, best execution. That’s in the middle of the range we last reported, with 4.375% at the upper end and 4.125% at the lower end. FHA loans are finally seeing a mortgage rate range falling back into the sub-four percent range; depending on the lender FHA mortgage rate numbers are reported between 3.75% and 4.25% best execution. Remember, “best execution” refers to rates offered to extremely well-qualified borrowers with outstanding FICO scores and other | more...

March 29, 2017

Cosigners and Co-Borrowers On FHA Loans

By Joe Wallace

In our previous blog post we discussed an FHA loan reader question about co-borrowers and their status. What is the basic difference between a cosigner and a co-borrower and how does an FHA loan work in such cases? FHA loan rules in HUD 4000.1 differentiate between a cosigner and co-borrower; the cosigner, while liable for the loan, does not have any ownership in the property. The co-borrower has both financial responsibility and ownership. Both cosigners and co-borrowers must have a legal primary residence in the United States or be U.S. citizens. Borrowers, co-borrowers, and cosigners all must provide basic information to the lender including Social Security numbers. Co-borrowers and cosigners are subject to the rules of HUD 4000.1 that restrict who can participate in an FHA loan transaction: “A party | more...

March 22, 2017

Mortgage Rate Trends: Still Moving Lower

By Joe Wallace

Mortgage rate trends continue to point to lower numbers post-Fed. Since our last report we’ve seen more downward momentum, thanks in no small part to some unfavorable stock market activity. Political and economic uncertainty often sends investors running for the security of safer investments and this week seems to have some classic examples of that happening. Which means, looking back, that we’ve watched mortgage loan rate trends shift from the upward momentum that brought on rates that hit multi-year highs to the current environment that, while not multi-year lows, certainly is a welcome improvement. The most recent moves lower may be reflected in closing costs rather than actual mortgage rates (depending on the lender) but if the trend persists we’re likely to see that change soon. 30-year fixed rate conventional | more...

March 21, 2017

Mortgage Rates Lower Post-Fed

By Joe Wallace

Since our last report, the Fed hiked interest rates. That comes as no surprise as it was widely expected to happen, and mortgage loan rates began rising ahead of that announcement as the industry began to anticipate the move. Once the Fed announcement happened, many sources point out that when rates began to fall again, it was due in part to adjustments following that anticipation. There is no single reason why mortgage loan interest rates rise and fall-any number of factors may combine to influence investors in the markets that directly affect these rates. But in the short term, single causes can and often do exert greater influences. Now that the Fed announcement has come and gone, what’s the state of mortgage rates in the short term? In general, they | more...

March 16, 2017

FHA Loan Assumptions: A Reader Question

By Joe Wallace

How do FHA loan assumptions work? There are many situations where assuming another borrower’s FHA mortgage could be beneficial to all involved. Consider this reader question we responded to recently: “My mother in law took out an FHA loan due to illness preventing her from working. The lender allowed myself and fiance to make payments on her behalf based on our income in order for her to keep the house. Is it possible for her to sign the house over to us since her health is declining?” This is a circumstance where it would definitely help to know about FHA loan assumptions and how they work. The rules for this procedure is found in HUD 4000.1, which starts off with a definition. “Assumption refers to the transfer of an existing | more...