Articles in Category: FHA Loan Types

Buying A Fixer-Upper With An FHA 203(k) Rehab Loan

August 30, 2016

FHA Loans and Foreclosure Avoidance: The FHA HAMP Loan

When you purchase your home with an FHA mortgage loan, chances are you’re thinking more about moving in, getting settled, and making the home your own than you are the possibility that you could encounter financial hardship at some point and miss mortgage payments. But these things do happen to some borrowers, and the FHA has a program set up to help those who get into financial trouble. The FHA HAMP program was created to help borrowers avoid foreclosure and keep them in the home. FHA HAMP is a loan modification program and not a refinance loan, which is an important distinction to make. Under the terms of the FHA HAMP program, the FHA permits ” the use of a partial claim up to 30 percent of the unpaid principal | more...

August 29, 2016

Mortgage Rate Trends: A Mostly Flat Week

By Joe Wallace

Mortgage loan rates were mostly unchanged last week, budging a bit on Friday after Fed chairperson Janet Yellin’s speech at an important event in Jackson Hole, Wyoming. Rates seemed to be in defensive mode in advance of this speech, which many looked to as a possible spoiler for mortgage loan rates. Why? Because at the present moment, investors are looking hard for any hint from the Fed that another interest rate hike might occur, the timing of such a hike, and the severity. The Fed’s rate hike issues have affected mortgage rates in months and years past as investors react to the news or lack of it. Investor behavior is responsible for the Fed-related volatility in mortgage loan rates rather than the Fed itself, so it’s important to make the | more...

August 24, 2016

FHA Loan Basics You Should Know

By Joe Wallace

If you are thinking about buying a home and are weighing your options for an FHA home loan, there are some basics you should know about FHA mortgages that can help you better prepare for an FHA loan application. FHA home loans are for all financially qualified applicants; there are no income minimums OR maximums. Borrowers should know that FHA mortgages are designed to help borrowers at all income levels find an affordable home. Your debt to income ratio (the amount of money coming in each month compared to your monthly expenses and financial obligations) is an important factor in loan approval, but you will not be disqualified because of an income threshold based on your annual income or monthly income alone. FHA mortgages allow you to purchase a home | more...

August 22, 2016

Mortgage Rate Trends: Slightly Higher

By Joe Wallace

Mortgage loan interest rates were up and down last week, closing on Friday slightly higher ahead of a week that could have major impact on interest rates depending on what Fed Chair Janet Yellin says during a conference in Wyoming. Anytime the Fed or its chairperson has something to say about the possibility or timing of another interest rate hike, we see great potential for volatility in mortgage loan interest rates. That’s due to investor reaction to the statements, as mortgage loan interest isn’t directly tied to events like these. The Wall Street Journal has something to say about this week’s event which may shed a bit of light on why so much attention is paid recently to the Fed and interest rate policy: “The proverbial ‘all eyes’ are turning | more...

August 18, 2016

FHA Loans and 401K Income

By Joe Wallace

A reader got in touch with us recently in the comments section to ask a question about 401K retirement income as it relates to FHA loan approval. “Does the fact that you have a 401k count as income or does it benefit your chances in any way of getting a home loan?” FHA loan rules in HUD 4000.1 cover a variety of income sources including 401k income. Individual retirement account income from a 401K may be used to qualify a borrower for an FHA mortgage provided the income meets FHA and lender standards. HUD 4000.1 instructs the lender on how to review 401K income, beginning with a definition of it: “Individual Retirement Account (IRA)/401(k) Income refers to income received from an IRA.” With the definition spelled out, the FHA loan | more...

August 17, 2016

Mortgage Rate Trends: Up And Down Before Fed

By Joe Wallace

Mortgage loan interest rates are experiencing another week of ups and downs; on Tuesday rates were unchanged to slightly higher depending on the lender, and all eyes are on Wednesday’s Fed meeting minutes release. This has serious potential to move rates in one direction or the other depending on investor reaction to the contents of those minutes. Most of the current drama in this department has to do with the timing of any proposed Fed interest rate hike or the lack of an indication of same. The potential for another interest rate hike by the Fed creates volatility in the markets that affect mortgage loan rates, so the uncertainty here is a big X factor this week. On Tuesday, 30-year fixed rate mortgages were reported at a best execution 3.5%. | more...

August 16, 2016

FHA Loans and Social Security Income: A Reader Question

By Joe Wallace

A reader asks, “I am halfway though a 15 year mortgage on a 2009 manufactured home. I am disabled, collecting SSD and my wife works as a school teacher.Would I qualify to refinance my home?” FHA loans and refinance loans have rules that do permit the use of Social Security income to qualify for a loan, provided the income meets certain requirements. The lender is required to determine that the income is likely to continue. HUD 4000.1 has guidelines and instructions to the loan officer that include the following about Social Security and other disability benefits: “Disability Benefits are benefits received from the Social Security Administration (SSA), Department of Veterans Affairs (VA), other public agencies, or a private disability insurance provider. The Mortgagee must verify and document the Borrowers receipt | more...

August 15, 2016

FHA Amends Rehab Loan Consultant Fee Policy

By Joe Wallace

The FHA has amended policies for the FHA 203(k) Rehabilitation Mortgage Insurance Program where the 203(k) Consultant Draw Inspection Fee is concerned. According to the FHA official site, the rule change is designed to revise the maximum fee that may be charged by a 203(k) consultant for the “Draw Inspection” Mortgagee letter 2016-12 states that the FHA and HUD continue to “analyze the overall Consultant Fee structure” established in 1995 for FHA rehab loans. In doing so, the FHA and HUD have “determined that the current $100 limit on the Draw Inspection Fee discourages consultant participation in the Section 203(k) program and has the potential to limit access to credit.” Consequently, the FHA has revised this fee limit. “The Consultant Draw Inspection Fee is amended to permit a fee that | more...

August 15, 2016

Mortgage Rate Trends: Ups and Downs

By Joe Wallace

Mortgage rates went higher and lower last week. They bounced higher Monday, recovered Tuesday, and repeated that cycle on Thursday and Friday. At week’s end, rates recovered back to 30-day lows, but there are a variety of scheduled economic data releases ahead that could push rates higher depending on investor reaction to them. Friday, 30-year fixed rate conventional mortgages wound up in range between 3.375 and 3.5% best execution, though some sources claim 3.375% is more available at the time of this writing. FHA mortgage loan interest rates are holding in their comfort zone at 3.25% best execution, though FHA rates can vary more among participating lenders. It pays to shop around. Best execution rates are offered to borrowers with ideal credit. Your FICO scores, loan repayment history and other | more...

August 8, 2016

Mortgage Rate Trends: Higher After Jobs Report

By Joe Wallace

Mortgage loan interest rates pushed higher on Friday after a stronger-than-expected jobs report. The Employment Situation Report came out on Friday with good news for the economy-approximately a quarter million new jobs reported as opposed to the approximately 180 million expected to be reported. This resulted in what can be confusing for some who are new to market watching; good news for the economy equalling bad news for mortgage loan rates. It’s something that often happens, and it’s something you come to expect after some experience watching mortgage loan interest rates and the factors that can affect them. 30-year fixed rate conventional mortgages closed out Friday reported at a range between 3.375 and 3.5% best execution. Friday’s move higher could reflect in a borrower’s closing costs rather than the actual | more...