Articles Tagged With: APR (Annual Percentage Rate)

March 10, 2014

FHA Loan Reader Questions: Employment Verification

A reader asks, “I have been employed at a job for 5 years, and another for 1yr 3 months and looking to quit both for a 3rd job I have been employed at for 4 months. the third job is currently under the table until I am able to be full time. we are looking to buy our house in April. Should I wait to quit the other jobs or will I be okay?” We can’t give advice on whether to keep or quit a job (that’s outside the topics we cover here) but one thing that’s important to remember in these types of situations is the lender’s requirement to verify both income and employment. Any job that is, as the reader question puts it, “under the table” would be | more...

April 3, 2013

New FHA Home Equity Conversion Mortgage Rules Take Effect

By Joe Wallace

In January of 2013, the FHA announced pending rule changes to its Home Equity Conversion Mortgage program (FHA HECM for short). Those changes were scheduled to take effect on 1 April 2013 and are now in full effect. In the FHA Mortgagee Letter HUDNo.13-010, the agency announced, “…the consolidation of the Federal Housing Administration (FHA) Home Equity Conversion Mortgage (HECM) Standard and HECM Saver initial mortgage insurance premium (MIP) and maximum principal limit factors for fixed interest rate mortgages.” The announcement states that the HECM Saver program is, as of 1 April 2013, the “only initial MIP option available to mortgagors who seek the predictability of a fixed interest rate mortgage and lower upfront closing costs.” The announcement adds, “Mortgagees shall designate HECM Saver as the initial MIP and use | more...

April 2, 2013

FHA Mortgage Insurance Premium Changes

By Joe Wallace

Effective on 1 April 2013, the FHA changed its mortgage insurance premium rules. We’ve discussed this at length in other blog posts, but now that the date has come and gone for the changes to take effect, it seems like a good time to review those changes. According to FHA mortgagee letter 2013-04, ““FHA will increase its annual mortgage insurance premium (MIP) for most new mortgages by 10 basis points or by 0.10 percent.” FHA MIP for Jumbo Loans is also going up. An FHA Jumbo Loan is basically described as mortgages at $625,500 or more. The increase on these loans is “5 basis points or 0.05 percent, to the maximum authorized annual mortgage insurance premium.” These MIP increases exclude “certain streamline refinance transactions.” The FHA describes these changes in | more...

March 6, 2013

FHA HECM Deadline Approaching

By Joe Wallace

Earlier this year, the FHA and HUD issued new guidelines regarding the FHA Home Equity Conversion Mortgage Loan program also known as HECM. Important changes are coming to this home loan program which is designed for those age 62 or older. According to FHA Mortgagee Letter 2013-01, the changes are effective for all HECM fixed-rate case numbers assigned on or after April 1, 2013. What are these changes and why are they occurring? According to the mortgagee letter, “To help sustain the HECM program as a viable financial resource for aging homeowners and to strengthen the Mutual Mortgage Insurance Fund, the HECM Saver will be the only initial MIP option available to mortgagors who seek the predictability of a fixed interest rate mortgage and lower upfront closing costs”. This means | more...

February 13, 2013

FHA HECM Loan Changes: When and How

By Joe Wallace

On January 30, FHA issued guidance about pending changes to the FHA Home Equity Conversion Mortgage or HECM loan program. The changes affect all FHA HECM loans for fixed rate mortgages with case numbers assigned on or April 1, 2013. According to the FHA official site, “To help sustain the HECM program as a viable financial resource for aging homeowners and to strengthen the Mutual Mortgage Insurance Fund, the HECM Saver will be the only initial MIP option available to mortgagors who seek the predictability of a fixed interest rate mortgage and lower upfront closing costs.” This, according to FHA Mortgagee Letter 2013-01, requires the lender to “designate HECM Saver as the initial MIP and use the HECM Saver principal limit factors to determine the amount of funds available to | more...

February 5, 2013

FHA Announces Changes To HECM Loan Program

By Joe Wallace

The FHA has issued a press release and Mortgagee Letter describing changes to the FHA Home Equity Conversion Mortgage (HECM) program. According to the FHA official site, the FHA will merge certain options associated with the HECM program and the FHA HECM Saver program as described below: “…FHA will consolidate its Standard Fixed-Rate Home Equity Conversion Mortgage (HECM) and Saver Fixed Rate HECM pricing options. This change will be effective for FHA case numbers assigned on or after April 1, 2013. The Fixed Rate Standard HECM pricing option currently represents a large majority of the loans insured through FHA’s HECM program and is responsible for placing significant stress on the MMI Fund.” The FHA press release adds, “To help sustain the program as a viable financial resource for aging homeowners, | more...

February 4, 2013

FHA To Increase Mortgage Insurance Premiums

By Joe Wallace

In the last week of January 2013, the FHA issued a statement announcing an increase in annual mortgage insurance premiums or MIP for its single family home loans. According to the FHA official site, “FHA will increase its annual mortgage insurance premium (MIP) for most new mortgages by 10 basis points or by 0.10 percent.” The FHA is also increasing the annual MIP for FHA Jumbo Loans, which are defined as mortgages at $625,500 or more, “by 5 basis points or 0.05 percent, to the maximum authorized annual mortgage insurance premium.” The FHA also says the increases mentioned here are excluding “certain streamline refinance transactions.” This change takes effect for FHA loans with case numbers assigned on or after April 1, 2013, with certain exceptions as granted by the FHA | more...

August 8, 2012

Veterans and FHA Loans: The National Housing Act

By Joe Wallace

A reading of the VA Lender’s Guide, which establishes rules for lenders processing home loans for qualified veterans under the VA Loan program, reveals an interesting section titled, “Certificate of Veteran Status – FHA Loans”. Modified on April 6, 2012 to make minor grammatical edits, this section of the VA loan rulebook pertains directly to veteran borrowers who seek FHA guaranteed home loans. According to this portion of the VA loan rulebook, “General Section 203(b)(2) of the National Housing Act permits a veteran to obtain slightly better terms than a non-veteran when obtaining Federal Housing Administration (FHA) mortgage financing. Although this involves FHA loans, VA is charged with making the entitlement determination for benefits under this provision.” How does the VA accomplish this? “VA will issue a VA Form 26-8261, | more...

July 4, 2012

FHA Appraisal Expiration Dates: Questions and Answers

By Joe Wallace

When buying a home with an FHA guaranteed mortgage loan, one of the most important steps in the process is the appraisal. An FHA appraiser reviews the home to make sure it lives up to minimum property requirements and assigns a fair market value to the property. There are many common questions about FHA appraisals; here are some of them along with the answers. How Long Is An FHA Appraisal Valid? Buyers who purchased property prior to January 1, 2010 may have experienced a different set of standards, but currently, FHA appraisals are considered valid for 120 days. After that time they expire. According to FHA.gov, “Effective for all case numbers assigned on or after January 1, 2010 the validity period for all appraisals on existing, proposed, and under construction | more...

June 1, 2012

FHA Home Loan Appraisals: When Do They Expire?

By Joe Wallace

FHA home loans require an appraisal to establish fair market value and insure the property meets minimum standards. But many borrowers want to know how long the appraisal has until it expires and whether or not an appraisal can be re-used. There are several reasons why this question arises; a borrower may decide not to close on the deal and another FHA loan applicant may decide to purchase the same property, for example. Or a borrower and seller may take longer than expected to close the deal. What does the FHA say about these issues? According to the FHA’s property and appraisal requirements found on FHA.gov, “Effective for all case numbers assigned on or after January 1, 2010 the validity period for all appraisals on existing, proposed, and under construction | more...