Articles in Category: FHA Loan Basics

May 15, 2024

Buying A Home? Ask The Seller These Questions

Are you looking for a home to buy with an FHA loan? It’s good to create a list of questions to ask the seller. Making the most informed decision you can on a specific house is important, and in addition to what you learn by asking about natural disasters in the area, property taxes, and the age of the roof, the way the seller responds to your question can be just as important as the answer you get. Asking Questions You should definitely do your own research on the local area to learn whether floods, tornadoes, hurricanes, or other natural disasters are a problem. But don’t miss the chance to ask the seller, even if you already know the answers. Ask the seller, “Has the home itself experienced a disaster, | more...

May 14, 2024

Why Get Pre-Approved For An FHA Home Loan?

By Bruce Reichstein

Why get pre-approved for an FHA mortgage? This is a question some first-time home buyers ask, and the answers can make a big difference in how you approach your home loan. FHA Home Loan Pre-Approval Does Not Commit You To A Mortgage When you fill out the forms to be pre-approved for a home loan, you are not committing to the transaction in the sense that you would be financially obligated to buy. The borrower is not legally committed to a purchase when getting pre-approved. Home loan pre-approval actually helps you be taken seriously as a buyer when you do find a home you’re ready to commit to. The buyer takes a pre-approved borrower more seriously and you may find that a pre-approval letter (depending on the housing market) is | more...

May 13, 2024

FHA Appraisal Guidelines You Should Know

By Joe Wallace

The FHA and HUD have reformed parts of the FHA single-family home loan appraisal guidelines found in HUD 4000.1. These changes are meant to improve the process for reconsidering an FHA appraisal in cases where there may be defects or violations of FHA policy. Can I Get A Revised FHA Appraisal? Was your FHA appraisal is flawed? In such cases the borrower or lender may be allowed to request a Recosideration of Value (ROV). An ROV is essentially a review of the appraisal to correct report deficiencies or problems with HUD regulatory compliance. You should not expect to be allowed a second appraisal only because the value comes in lower than anticipated. What HUD Says About ROVs The HUD official site says, “A Reconsideration of Value (ROV) refers to a | more...

May 9, 2024

When You Are Ready To Apply For Your FHA Mortgage

By Joe Wallace

When a borrower has the down payment funds and feels ready to commit to the house-hunting journey, applying to be pre-approved or pre-qualified for an FHA mortgage is the next logical step. But there are a few things to review before you begin. Gather Your Documents And Know Your Financials Applying for a loan includes bringing financial data to the bargaining table. You must gather two years of tax returns, you should know specifics about annual gross and net income, and be ready to give the lender information about outgoing debt, your current credit scores, and any other non-employment sources of income you want counted for loan approval purposes. Your lender requires this information to begin. Some situations require more information than others. For example, small business owners may be | more...

April 18, 2024

Mortgage Borrowers At Risk In 2024?

By Joe Wallace

Are FHA mortgages and other types of mortgages riskier in 2024? The answer may be YES thanks to a currently elevated potential for mortgage fraud initiated by scam artists. Fraud prevention company Funding Shield reports high fraud vulnerability in roughly half of all “portfolio loans,” including residential mortgages, in the first three months of 2024. According to HousingWire.com, such problems seem to arise due to a “lack of appropriate controls” related to closing procedures. In some cases, these problems are not related to a residential real estate borrower or seller, but for one specific aspect of the mortgage process, FHA mortgage loan applicants may be at an elevated risk. Wire Fraud Scams And Your Mortgage The Funding Shield report includes data about closing cost-related wire fraud vulnerabilities. Those potential problems | more...

April 16, 2024

What Some Get Wrong About Home Loans

By Joe Wallace

There is plenty of bad information about home loans out there. Many persistent myths color a house hunter’s opinion of certain mortgage options including FHA loans. What kind of misinformation is there in this area? It includes the wrong notion that FHA loans have need-based guidelines, such as an income cap, or that they are only for first-time home buyers. Both of those are untrue. Did Fox Business News Get It Wrong About Mortgages? In April 2024, the Fox Business News article, Today’s 15- and 30-year mortgage rates rise ran some information about the home loan process including a section discussing rate locks. The article includes the following, quoted verbatim: “A mortgage rate lock lets you lock in the current mortgage rate for a certain amount of time — often | more...

March 20, 2024

What To Know About FHA Loans And Escrow

By Joe Wallace

FHA loans typically involve some form of escrow. Some FHA loans have different escrow requirements than others and you should know what your specific loan type will require before you commit. What Is Escrow? Finance blogs often describe escrow as an arrangement where a third-party account retains money to facilitate a home loan. It’s done on behalf of the borrower and lender and money comes out of the account based on specific conditions or instructions. You can expect to use escrow to pay for property taxes, paying contractors for labor or materials, and even earnest money if you and the lender agree. Escrow provides a layer of protection for both borrower and lender and it pays to know as much as you can about how it works before you commit | more...

March 11, 2024

FHA Loan Down Payment Advice

By Bruce Reichstein

Are you looking for a home loan with a lower downpayment requirement? In 2024, FHA home loans are a smart option to consider in such cases as the housing market slowly tries to recover. These down payments are often lower than their conventional mortgage equivalents, and borrowers who struggle to come up with the 20% down needed to avoid conventional private mortgage insurance, which is required on a conventional mortgage, may find a better option in the FHA loan program. According to the Consumer Financial Protection Bureau, those who don’t pay 20% down on a conventional loan may encounter down payment requirements of up to 15%. “Most lenders offer conventional loans with PMI for down payments ranging from 5 percent to 15 percent.” The Bureau adds that “some lenders may | more...

February 13, 2024

FHA Loans Versus Other Government-Backed Mortgages

By Joe Wallace

There are three important government-backed mortgage loan options. They are FHA loans, VA mortgages, and USDA home loans. If you are new to these mortgage programs here are some basic facts about what to know when comparing these home loans. Basic Similarities Between FHA, VA, and USDA Home Loans How do these loans stack up to one another? These loans offer the lender federal government guarantees, reducing the risk to the bank and allowing the lender to offer lower-risk mortgages to customers with lower FICO scores or with other issues making it harder to qualify for a conventional loan. These loans also feature lower down payment requirements than some conventional lenders offer consumer benefits such as restrictions on your closing costs and what fees the lender is permitted to include. | more...

January 24, 2024

Home Loan Applications Rising In Early 2024

By Joe Wallace

Are you considering buying a new home with an FHA loan? Current market trends point to growing interest in existing construction purchases. And that is in spite of a bit of mortgage loan interest rate changes pushing rates higher (in the short term.) That move higher has not discouraged many from their overall impression of a housing market in recovery, however slow the progress may be. Business Insider reports that, at press time, “30-year mortgage rates have averaged around 6.32%,” according to Zillow. The report also notes that the rates are “a bit below” the December interest rate averages, “and more than a full percentage point down from when they peaked in October 2023.” As housing market and home loan interest rate conditions improve, demand for existing construction homes may | more...