Articles in Category: FHA Loan Basics

February 27, 2020

Low Home Loan Interest Rates: How Long Will They Last?

Mortgage loan interest rates and the coronavirus–how low can they go? COVID-19 and coronavirus headlines have, via investor reaction to the headlines and the situation in general, greatly affected mortgage loan interest rates, pushing them to lows not seen in quite some time. Investors are putting more funds in safer investments, which can serve to put downward pressure on mortgage loan interest rates. The rates have fallen to incredible lows in 2020; not many expected rates to fall THIS low and some homeowners are scrambling to refinance and take advantage of lower rates and less costly monthly payments. Some borrowers might feel as if maybe they owe it to themselves to try to buy or refinance with mortgage rates as low as they are now; 3.25% for FHA and VA | more...

February 12, 2020

Why Buy A Home In 2020?

By Bruce Reichstein

There are many reasons why it’s smart to think about looking for a forever home in 2020; owning instead of renting, the ability to freely customize your living space, being able to apply for cash-out refinancing to convert part of your home’s value into cash, and never having to wait for a landlord to fix a problem in the home. But in 2020 there’s another reason to consider owning a home soon; a Zillow.com report indicates that 2020 is going to be a good year for home values depending on the housing market. The Zillow Home Price Expectations Survey from the 4th quarter of 2019 includes data that indicates U.S. home values may grow by 2.8% in 2020. Rising or hot-again housing markets in the new year include Austin, Texas | more...

January 17, 2020

Home Loan Approval And Your Income

By Bruce Reichstein

Home loan approval means submitting your employment and income information to the lender, who must verify the information for accuracy. There are things you can do to help the process work in your favor if you know about certain nuances of the home loan approval process. Important Takeaways From This Article: Know how the lender checks your income data; Study the FHA home loan rules for employment and income, especially if you are self-employed, a commission earner, or a contractor; Know how frequent job changes may affect your loan; Shop around for a loan even if you think you’ve found a good bank; Know How The Lender Operates Some people mistakenly assume that income and employment verification are formalities; they are not. Your lender is required by law to carry | more...

January 16, 2020

Do You Need To Apply For An FHA Mortgage?

By Joe Wallace

Do you need to apply for a home loan to buy real estate in 2020? FHA mortgages feature a low minimum down payment, allow seller contributions to closing costs, and even permit down payment assistance from approved sources. What does it take to apply for an FHA mortgage? You will need proof of income, tax records, and bank statements. Borrowers also need to have a credit history of some kind, even if non-traditional. FHA loan rules allow non-traditional credit, but lender standards will be very important. FHA Loan Approval Requirements FICO scores between 500 and 579 for a 10% down payment, or FICO scores at 580 or higher for the lowest down payment of 3.5%. You will also need 24 months of employment history as a general rule, and you | more...

July 19, 2019

Mortgage Loan Interest Rates: What You Need To Know About Trends

By Bruce Reichstein

What should borrowers know about mortgage loan interest rate trends? Especially when those trends are pushing rates toward historic lows? It’s a very good idea to be aware of the forces that affect mortgage rates; understanding how they work is a step toward making a more informed purchase as a house hunter or first-time home buyer. Interest Rate Trends Are Affected By The Economy What is good for the economy is often bad for mortgage loan interest rates, and vice versa. You will see rates pushing higher when there is good economic news, and rates trend lower when there is bad economic news. Except when they don’t. The thing to remember about mortgage loan rates is that no single factor affects them; it’s a combination of things and sometimes interest | more...

May 30, 2019

FHA Appraisal Rules You Need To Know

By Bruce Reichstein

Are you a first-time home buyer? Are you looking into your FHA home loan options and not sure what the appraisal process is all about? The FHA appraisal is a tool for the lender to determine the home’s fair market value and a way to make sure a property meets MINIMUM standards. No matter what you might hear (and some mistakenly call the appraisal an “inspection”) the appraisal will not tell you the true condition of the home. Even the FHA and HUD themselves warn borrowers to pay for the optional home inspection (which is technically not a requirement, but then again, neither is test-driving your car before you buy it). And what should borrowers know about the FHA appraisal process? The appraisal’s most important feature for some borrowers is | more...

May 21, 2019

Questions A First-Time Home Buyer Should Ask The Seller

By Bruce Reichstein

First-time home buyers and those who have purchased a home before but haven’t had to explore housing markets in a while should make a list of questions to ask the seller of a home placed on the real estate market. Sometimes it’s not the answer to the questions as much as the way the seller answers those questions-your ability to ask important questions in those cases is important, but so is paying attention to how the questions get answered. For example, the question, “Has the roof ever been replaced or repaired?” may get you a direct answer; “No, nothing has ever gone wrong with the roof”. But if the seller hesitates or offers a less-than-forthcoming answer, such as, “I don’t remember anything going wrong with the roof” or “No, the | more...

May 8, 2019

FHA Loan Appraisal Issues: Environmental Concerns

By Bruce Reichstein

The FHA appraisal requires attention to a variety of areas in and around the home, but one aspect of the appraisal has to do with assessing safety hazards and environmental issues that could interfere with the borrower’s ability to use the home. In the case of these FHA appraisal rules, the term “environmental” refers specifically to the areas in and around the home. HUD 4000.1, the FHA loan handbook, begins addressing these concerns by instructing the lender: “The Appraiser must report known environmental and safety hazards and adverse conditions that may affect the health and safety of the occupants, the Property’s ability to serve as collateral, and the structural soundness of the improvements”. Such hazards can include lead-based paint, mold, chemicals, and other hazards. One recent addition to the HUD | more...

May 6, 2019

FHA Appraisals Versus Home Inspections: Facts You Should Know

By Bruce Reichstein

We write about FHA home loans, the FHA appraisal process, and why the appraisal should never be used in place of a home inspection to determine the condition of the home. Borrowers who do not personally arrange for a home inspection and rely on the results of the FHA appraisal alone put themselves at serious risk of buying a home that has hidden problems. Because lenders and other industry professionals sometimes use the term “inspection” when referring to the appraisal, borrowers may assume that the appraisal really IS an inspection (which is more in-depth than an appraisal). But this is not true. Here’s one example why you should not rely on the FHA appraisal to tell you the condition of the home; HUD 4000.1 includes appraisal requirements. Here’s a passage | more...

April 5, 2019

FHA Loan Facts

By Bruce Reichstein

When you start doing research on home loans and want to learn what it takes to qualify for an FHA mortgage loan as either a first-time home buyer or as a return borrower, you will find websites with lists of loan approval requirements. Some of those FHA home loan approval requirement lists look like this: A credit score of 580 or higher for the lowest down payment A debt-to-income ratio of 43% or less 3.5% down payment 1-2 years of consistent employment history A property that meets FHA standards OR A home eligible for FHA 203k rehab loan financing You may find a caveat on lists like these stating that they are “general guidelines” and that is true. What isn’t always included in those caveats is that additional lender standards | more...