Articles in Category: FHA Loan Types

February 2, 2017

FHA Mortgage Facts You Should Know

FHA mortgage loans are a very good option for borrowers looking for a lower down payment and less stringent credit requirements than conventional mortgages. Did you know that FHA home loans do not feature a minimum or maximum income requirement? A borrower’s ability to qualify for an FHA mortgage depends on FICO scores, debt-to-income ratios, credit history, and other factors but there’s no “qualifying dollar amount” for income in terms of minimums OR maximums. Some believe that FHA mortgages are only for first time home buyers, the economically disadvantaged, or only for typical suburban homes. But FHA home loans are available to anyone who is financially qualified and wants to use the property to be purchased as their primary residence. FHA mortgages require only a 3.5% down payment in typical | more...

February 2, 2017

Mortgage Loan Interest Rate Trends: Edging Higher

By Joe Wallace

Much attention was given to the Fed on Wednesday, but there was no hint of another planned rate hike; good news for now but that did not help mortgage loan rates in the end as stronger-than-expected jobs data helped put upward pressure on rates. Those who are not used to watching mortgage rate trends may be confused at this, seeing that what’s good for the economy will often be bad for mortgage rates. And that is not just perception. When economic data such as the Employment Situation Report shows strength, that often equals higher rates in the short term. Such reports do not directly affect mortgage loan interest rates, but investor reaction to that data can and often does. And such was the case on Wednesday, with stronger employment figures | more...

Can I get an FHA home loan if I owe back taxes?

January 31, 2017

Eligibility Rules For FHA Loans

By Joe Wallace

Eligibility rules for FHA loans are found in HUD 4000.1, which addresses who is permitted to apply for an FHA single-family home loans. Who can apply for an FHA loan and what do the rules say about these applicants? The most basic eligibility rules for FHA loans include the requirement that the borrower be an owner-occupier of the property to be purchased. FHA loan rules do not permit FHA single family home loans to be used for investment properties, so the borrower who wishes to buy a multi-unit property and rent out all of those units to other people would not be approved for the mortgage. The same is true of those who wish to purchase time shares, condo hotels, or other “transient occupancy” or short-duration occupancy properties. That said, | more...

January 31, 2017

Mortgage Rate Trends: Opening Lower

By Joe Wallace

Mortgage rates ended last week nearly exactly where they started after some ups and downs, and on Monday rates opened the week a bit lower. However, the lower rate just pushes things back closer to the bottom part of what market watchers have labeled the new, higher range. We started seeing that higher range come into plat at or near election time-markets hate uncertainty and investor behavior between November 2016 and January 2917 has demonstrated that rather well. At first it wasn’t clear what was going to happen with short-term mortgage rate trends in general, but now we see that new and higher range at work in the short term. There are always influences (world news and events, economic data, unexpected changes in regulations or new legislation) that can alter | more...

January 25, 2017

Cash Back To The Borrower and FHA Loans

By Joe Wallace

Do FHA loans permit cash back to the borrower? We get many reader questions in our comments section about this subject. Some want to know if they can borrow more than the cost of the home and use the excess funds for personal use. Others want to know if cash-back refinance options are available on FHA mortgages. The rules that govern cash back to the borrower can be found in HUD 4000.1. As a general rule, FHA loans for “forward mortgages”, which means typical house purchases, do not allow cash back to the borrower. There’s an exception for money that was paid up front for something that was later permitted to be included into the loan amount. That would be considered a refund and is not forbidden by FHA loan | more...

When Is An FHA Loan Better Than A Conventional Loan?

January 24, 2017

Reverse Mortgage Issues: A Reader Question

By Joe Wallace

A reader asks, “I am an inheritor of a reverse mortgage home. I have declared to the bank that I am paying off the loan in cash at 95% of the appraised value. The appraisal came in to my benefit.” “The appraisal is less than two weeks old and the bank has already stated they may not be able to close before the expiration date because of their workload and may require another appraisal. There is over 100 days left before the expiration date.I told them this was unethical. Should I call HUD? Hire a lawyer?” The only legal advice comments we can give out in cases like these is that it’s never a bad idea to consult legal counsel with specific experience in these issues. There are a number | more...

January 24, 2017

Mortgage Rate Trends: Sharply Improved

By Joe Wallace

You may have noticed some extra coverage of mortgage rate trends in the last few weeks; rates have moved up and down in ways that seem to insist on added coverage, and Monday’s mortgage rate activity was definitely that. Rates recovered ground lost in the previous week and part of the reasons for that are also the reasons we saw higher rates in our last report; there is still a great deal of uncertainty among the markets and investors when it comes to economic policy, how the new administration will deal with overseas trade and other important issues. Mortgage rate trends currently reflect this uncertainty. Investors reacted to the earliest activity from the new regime in Washington D.C. and those reactions helped push mortgage rates lower. We’re now seeing a | more...

January 23, 2017

Mortgage Loan Interest Rate Trends: Higher

By Joe Wallace

Mortgage loan interest rate trends have been up and down within a certain range in the new year, but uncertainty over the new administration in Washington D.C. has investors skittish. Since our last report we’ve seen mortgage loan rates push higher, with some lenders hitting 4.375% territory (best execution). For 30-year fixed rate conventional mortgages, our sources say that means that at the time of this writing, there’s a best execution range that starts at or near 4.125% (a smaller number of lenders offering this) and ending with Friday’s at-or-near 4.375% for other lenders. FHA mortgage rates are at the time of this writing still holding at a best execution 3.75%, but that’s likely to change soon if the upward trend remains. As always, the rates you see listed here | more...

How much can I borrow with an FHA refinance loan?

January 20, 2017

FHA Updates PACE Policy

By Joe Wallace

A new mortgagee letter updates FHA loan policy on properties bought with FHA loans that are “encumbered with a Property Assessed Clean Energy obligation”. Mortgagee Letter 2017-06 updates PACE policy starting with a reminder; “The terms and conditions of a PACE obligation may vary by state, local government, and PACE program. Generally, a PACE obligation is secured and collected in the same manner as a special assessment is treated by the local government; funds obligated are not paid directly by the Borrower to the party providing the PACE financing.” When the sale happens (including foreclosure sales), if a property has “outstanding PACE financing” the obligation will, according to the mortgagee letter, “continue with the property causing the new homeowner to be responsible for the payments on the outstanding PACE amount. | more...

January 19, 2017

Mortgage Rate Trends: Moving Higher

By Joe Wallace

While we don’t report on mortgage rate trends on a daily basis, we do give more time to that coverage when circumstances warrant, and this week definitely rates a closer look at the trends. Since our last report, mortgage rates moved decisively higher, pushing back in the direction of the mid-four percent zone (but not there yet). Some market watchers blame (at least in part) bond market performance for the most recent upward spike that pushed 30-year fixed rate conventional mortgages into a range between a best execution 4.125% and a best execution 4.25%. Prior to that, coming out of the weekend we saw more lenders at the lower end of that range. Could some borrowers see them most recent changes reflected in closing costs rather than actual mortgage rate | more...