Articles in Category: FHA Loan Types

When Is An FHA Loan Better Than A Conventional Loan?

April 26, 2016

FHA Loans and Borrower Debt: Recent Credit Applications

When applying for an FHA mortgage, like any home loan, a borrower’s debt-to-income ratio will be an important factor in loan approval. The lender needs to know that the borrower can afford both monthly financial obligations as they exist at application time, and those financial commitments plus the amount of the monthly mortgage payment. For that reason, the lender will examine a borrower’s existing debt and compare it with verifiable income to see what percentage of the applicant’s income is taken up by bill payments each month. But what about a borrower’s potential future debt? Lenders have access to the borrower’s credit reports, and that access is used to see what current FICO scores are plus the applicant’s credit history. One thing that shows up on your credit history? Credit | more...

April 26, 2016

Mortgage Loan Interest Rate Trends: Higher Ahead of Fed Statement

By Joe Wallace

Last week on Friday, rates moved higher. The week ended with 30-year fixed rate mortgages in a higher range between 3.625% and 3.75%, and FHA rates in their own new range between 3.25% and 3.5%. On Monday, things stayed more or less the same, though market watchers say it could be a difficult week due to a variety of factors including the Fed Statement due to be released on Wednesday. (The Fed meets on Tuesday, but releases a statement the following day.) That statement has great potential to move rates. According to a report by Marketwatch.com, the Fed is expected to keep the option for a June interest rate hike on the table. In the past any talk of rate hikes is enough to bring knee-jerk reactions by investors over | more...

April 22, 2016

Mortgage Loan Interest Rate Trends: Higher

By Joe Wallace

Mortgage rates are definitely in an upward trend, short term, which some market watchers blame in part on bond market activity. The European Central Bank (ECB) meeting this week was also a possible factor; some financial headlines indicate that markets were “mixed” in Europe following the scheduled event. Regardless of how much or how little that may have changed rates here in the the U.S. mortgage loan rates are at the time of this writing being reported at four-week highs. 30-year fixed rate conventional mortgages are at a best execution range between 3.625% and 3.75%. More significantly, FHA rates have broken into a range of rates with the previously held 3.25% now at the bottom end of that range with 3.5% on the top side. FHA rates tend to change | more...

April 21, 2016

Mortgage Loan Interest Rate Trends: Moving Higher

By Joe Wallace

Mortgage loan rates were on the rise on Wednesday. There have been scheduled economic data releases this week as well as a meeting of the European Central Bank (ECB), but market watchers point to bond activity as an important current factor for this week’s move higher. The ECB factor could still make a difference this week so it’s not safe to ignore overseas economic headlines when trying to make a lock or float decision in the short term. 30-year fixed rate conventional mortgages are between 3.625% and 3.75%, best execution. FHA mortgage loan rates are still in 3.25% territory but it’s not certain how long that best-execution rate will persist in an upward rate trend. Much could depend on how sharply rates move from here. As always, best execution rates | more...

April 19, 2016

Mortgage Loan Interest Rate Trends: Holding At Recent Lows

By Joe Wallace

On Monday, mortgage rates closed out the trading day holding at recent lows. There are some important economic data releases coming and there’s a meeting of the European Central Bank scheduled for Thursday–all, some, or none of these may affect rates depending on investor reaction to data and announcements that follow these events. Also, rates can also be influenced by breaking news or unexpected events that cause investors to react in ways that influence mortgage loan interest rates. However, those rates are low at the moment and holding there, but factors like the ones mentioned above could put upward pressure on rates, making the “lock or float” choice more complicated, especially for those with closing dates in the next month or so. At the time of this writing, 30-year fixed | more...

April 18, 2016

On the New FHA Student Loan Policy

By Joe Wallace

We’ve gotten a variety of questions and comments about the FHA’s recent update of policy regarding student loans, deferred obligations, and what calculation the lender is supposed to use when a borrower applies for an FHA mortgage with student loan debt in his or her name. Under the previous FHA loan policy, student loans that were in deferred status were still required to be included in the debt to income ratio by the lender. This was done by taking the balance of the student loan debt and using a percentage of it to calculate an estimated monthly mortgage payment if an actual payment wasn’t available at application time. The updated FHA loan policy for deferred obligations now excludes student loan debt. The rule for deferred obligations–a financial obligation which will | more...

April 15, 2016

Mortgage Rate Trends: Slightly Higher

By Joe Wallace

On Wednesday and Thursday, mortgage loan interest rates have risen slightly. We’ve had a couple of scheduled economic data releases this week, but some market watchers this week gave bond market activity more attention. At the end of the day on Thursday, we see 30 year fixed rate conventional mortgages still being reported at 3.625% best execution in many cases, but our sources indicate that fewer lenders-the most aggressive ones-offered rates closer to 3.5%. So in effect, the slightly higher rates will come in the form of higher closing costs for some, but for others, the best execution rate may be the same as the day before depending on the lender. FHA mortgage loan rates are still holding at a best execution 3.25%. FHA rates tend to vary more among | more...

April 13, 2016

FHA Mortgage Rate Trends: Holding Steady

By Joe Wallace

Mortgage rates held steady on Tuesday, ahead of Wednesday’s Retail Sales Report and Thursday’s Consumer Prince Index report. These scheduled economic data releases can and do affect mortgage rates depending on investor reaction to the data in the reports; borrowers who are hoping for lower rates this week will have to contend with these releases as a potential spoiler for rates moving lower in the short term. Mortgage rates seem to be at the bottom of a range at present, so holding steady is good news, but upward movement (however small) is always likely depending on scheduled economic data releases, breaking news, or other factors that may affect the markets that influence mortgage loan rates. At the time of this writing, 30-year fixed rate conventional mortgages held steady at between | more...

April 11, 2016

Mortgage Rate Trends: Near Best Levels All Year?

By Joe Wallace

With only one day last week with rates moving upward, we’ve seen mortgage loan interest rates hit territory better than we’ve seen for a good portion of 2016. Much of last week was either improvement, or holding steady following that improvement. On Friday rates didn’t move downward, but they definitely held steady. 30 year fixed rate conventional mortgage rates with some very competitive lenders were as low as 3.5% best execution, with many more offering a best execution 3.625%. FHA mortgage loan rates remained at 3.25% best execution, having moved out of a previous range with 3.5% at the top end (best execution). It’s not clear whether this rate will become a new comfort zone for FHA loans or if we’re seeing a short term trend only. As always, best | more...

April 8, 2016

FHA Loan Income Verification Rules: Military Income

By Joe Wallace

Military members and veterans have plenty of reasons why they might choose an FHA mortgage or refinance loan. Regardless of the reasons why you choose to go FHA, there are rules for military income verification you should know that will help both in the planning stages and when you’re submitting paperwork to the lender. To begin, military income is not simply defined as basic pay. Military pay can include a variety of things. HUD 4000.1 has a definition that clears up any ambiguity about the basic pay and allowances allowed to be included in the debt to income ratio once verified: “Military Income refers to income received by military personnel during their period of active, Reserve, or National Guard service, including: –base pay –Basic Allowance for Housing –clothing allowances –flight | more...