April 10, 2012
A reader asks, “My question: if the purchase price of a home I want to buy is 290,000 the maximum sellers concession can only be a maximum of 6% of the agreed price? Can it be more than 6% if the home values at a greater than 290k ?”
February 27, 2012
We always encourage people to ask us questions about the FHA home loan process in our comments section, and one thing that definitely helps us to answer them properly is to provide as much specific detail about your question as possible. One reader asks, “Applying for an FHA Loan and was told that the assistance with closing costs on my loan floats. One day it could be 5.0% or 4.0%. Is that true?” It’s tough to know what the specific question is in this case, but most likely the reader is asking about seller concessions. These concessions are permitted by FHA loan rules, which state; “The seller and/or third party may contribute up to six percent of the lesser of the property
February 8, 2012
We get many questions about FHA home loans from our readers; some of the most frequently asked include questions about FHA loan down payment issues and the acceptable sources of down payment funds. It’s true that all FHA new purchase home loans require at least a 3.5% down payment. That amount–the 3.5%–is current at the time of this writing. If that FHA mortgage down payment requirement changes, your lender should let you know before you commit to the mortgage in writing. In Chapter 5 of HUD4155.1, the rules state clearly; “Under most FHA programs, the borrower is required to make a minimum downpayment into the transaction of at least 3.5% of the lesser of the appraised value of the property or the sales price.” The reason the FHA requires the | more...
February 7, 2012
The FHA has strict rules about how a loan may be calculated. There’s the minimum cash investment required of the borrower, there are FHA loan limits, and there are rules covering what kinds of incentives a seller may provide in the form of interest rate buydowns and other financial contributions. Did you know that in some cases, the cost of home repairs on a sale property can be included in the sale price of the home for FHA loan purposes? According to Chapter Two of HUD4155.1, “Repairs and improvements may be added to the sales price before calculating the mortgage amount when…the repairs and improvements are required by the appraiser as essential for property eligibility”. These costs must be paid by the borrower, and
February 1, 2012
Nearly 30 percent of same-sex couples were treated differently when trying to buy or rent a home. That figure was published in a 2007 report by Michigan’s Fair Housing Centers. FHA and HUD have announced new regulations designed to end that sort of discrimination and much more. According to HUDNo.12-014, new regulations have been implemented to “ensure that HUD’s core housing programs are open to all eligible persons, regardless of sexual orientation or gender identity” according to the press release.
January 16, 2012
Recently we’ve gotten a few reader questions about FHA condo loans. It’s true that the FHA will insure a condo loan for projects that are approved by HUD/FHA. Here are some facts about FHA condominium loans and the requirements for them. Condo Loans Are Different Than Suburban Home Loans By its very nature, FHA condo loans are unique compared to the ownership issues connected with a typical suburban home. According to the FHA official site, “Condominium ownership is different from other forms of home ownership.
January 10, 2012
Filling out the FHA loan application is the first official step on the road to an FHA guaranteed mortgage. All the preparation a borrower should be doing prior to the loan application including the review of your own personal credit data, making a budget, closing unneeded lines of credit, and other steps are just the preliminaries. The application is what sets you on the path to home ownership. But what does your lender do with the application data once you’ve handed it over? FHA loans are issued by private banks and mortgage companies, not the government. Participating FHA lenders must insure the credit they issue is not a risky investment, and the details on your credit application are not just reviewed, they are also verified to make sure they give | more...
December 19, 2011
One recurring question in the reader comments section as of late involves the rules of cash-out refinancing loans and streamline refinancing loans insured by the FHA. Some borrowers seek loans on property that no longer has a mortgage, and wonder if FHA refinancing loans can help. Borrowers looking at options including FHA cash-out refinancing or streamline refinancing learn there are important differences between the two. FHA streamline loans require the home to have a lien, otherwise there is no loan to refinance. Without an existing mortgage, there’s no possibility an FHA streamline loan can be underwritten for that property. For example, in the HUD.gov frequently asked questions section, under the heading, “Streamline Your FHA Mortgage”, the site states; “FHA has permitted streamline refinances on insured mortgages since the early 1980’s. | more...
December 14, 2011
In a recent blog post we discussed the FHA Energy Efficient Mortgage Loan (EEM) and some of the basics of the program. The FHA EEM is for new purchase and refinancing mortgages and lets the borrower finance additional costs of energy-efficient upgrades or improvements to the home. Because the FHA loan program has loan limits and specific rules that govern those limits, it is easy to see how borrowers new to the FHA loan program could be confused by the terms of such a loan. After all, if a borrower can add at least $4,000 (or as much as $8,000 depending on the circumstances) to the FHA loan, how does one roll the costs of the improvements into the mortgage without exceeding the FHA loan limit for that purchase? According | more...
December 7, 2011
The most common FHA insured home loan is called the FHA 203(b). This is the loan most people considering a first time home purchase will apply for when they look into the FHA loan program. Another type of FHA loan is the 203(k), which according to the FHA official site, “enables homebuyers and homeowners to finance both the purchase (or refinancing) of a house and the cost of its rehabilitation through a single mortgage