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Articles Tagged With: Borrower’s Rights

July 5, 2012

FHA 203(b) Home Loans: How Do They Work?

By Joe Wallace

If you’re a first time home buyer interested in getting an FHA loan, there are several options you can choose from when you’re ready to commit to buying a home. Home loan experts recommend preparing for any new home purchase at least a year in advance so you have time to save money for the costs of the loan you need to pay up front, examine your credit score, and reduce any unnecessary open lines of credit. Once you’re ready to start house hunting, you have options that include getting pre-qualified for an FHA loan amount, or finding a suitable home and applying for the loan once you’ve made your choice. FHA loans work because participating lenders offer mortgage loans to qualified borrowers. The FHA itself does not lend the | 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...

 

July 4, 2012

FHA Loan Questions: What are the Rules for a Non-Occupying Co-Borrower?

By Joe Wallace

FHA loans require the primary borrower to certify he or she will live on the property, using it as the “primary residence”. But FHA loans allow the option for a non-occupying co-borrower–someone who will be financially obligated on the loan but does not live on the property. FHA loan rules, as spelled out in HUD 4155.1 Chapter Two Section B, say of these types of FHA loan transactions: “When there are two or more borrowers, but one or more will not occupy the property as his/her principal residence, the maximum mortgage is limited to 75% loan-to-value (LTV). However, maximum financing, as described in HUD 4155.1 2.A.2, is available for

 

June 26, 2012

FHA Loan Rules For 203(K) Rehab Mortgages

By Joe Wallace

The FHA describes its 203(K) Rehab loan as, “the Department’s primary program for the rehabilitation and repair of single family properties. As such, it is an important tool for community and neighborhood revitalization and for expanding homeownership opportunities.” “Since these are the primary goals of HUD, the Department believes that Section 203(k) is an important program and we intend to continue to strongly support the program and the lenders that participate in it.” But what are the rules for an FHA 203(k)? There are some restrictions on the type of property that can be rehabbed under this program, as well as requirements for the condition of eligible properties. For example, “To be eligible, the property must be a one- to four-family dwelling that has been completed for at least one | more...

 

June 26, 2012

FHA Loan Reader Question: Non-Occupying Co-Borrowers

By Joe Wallace

A reader asks, “Hello, I am interested in getting an FHA 203K mortgage to buy a fixer-upper and add repair costs on top of the loan amount. In the conditions of the FHA 203K plan, there is a stipulation that requires the homeowner to occupy the house. Must all of the people listed on the mortgage/loan live in the home? Can just one person listed live there without violating the terms?” FHA loans do make provisions for non-occupying co-borrowers. However, there are limits which apply to these transactions that can affect the amount of the FHA home loan. In most cases an FHA loan with a non-occupying co-borrower has a limit–for qualified borrowers the loan would be approved for 75% of the loan-to-value ratio, rather than the maximum loan amount. | more...

 

June 25, 2012

FHA Home Loans and “Qualifying Ratios”

By Joe Wallace

One frequently asked question about FHA home loans goes something like this: “Why do different banks seem to have different standards for FHA home loans?” It’s a legitimate question–some lenders require different credit scores than others, some are stricter about certain types of credit issues or require longer wait times after bankruptcy or foreclosure. Why? The FHA loan rulebook for lenders, HUD 4155.1, has a section in Chapter Four called “Qualifying Ratios” which can help borrowers understand why some of these variances may occur. Every bank has its own set of standards, based on the need to effectively manage risks in lending while allowing credit access to the largest number of qualified borrowers the company can support. What do the FHA rules require a lender to take into consideration when | more...

 

June 15, 2012

Important New HUD Rules For LGBT Home Buyers Seeking FHA Home Loans

By Joe Wallace

There are federal laws in place to prevent housing discrimination on the basis of race, color, creed, national origin, religion, and any number of other factors which have nothing to do with a borrower’s financial qualifications for credit. The Fair Housing Act is one such law, but many other rules apply. No matter if a borrower is applying for a conventional home loan, a VA guaranteed mortgage or an FHA mortgage loan, lenders, brokers, agents, landlords and other parties cannot discriminate in any aspect of the housing process. That said, one important set of protections has been, until recently, missing from the rulebooks for those in need of FHA/HUD services and programs. But in recent times, the Department of Housing and Urban Development has finalized a new set of rules | more...

 

June 13, 2012

FHA Loan Reader Questions: Can I Buy Another Home With An FHA Mortgage Loan?

By Joe Wallace

A reader asks, “We purchased our first home using an FHA loan – 5% down. We have outgrown our home due to an expanded family and we are looking to purchase another home that is bigger – is it possible to qualify for another FHA loan – we have at most 10% to put down towards a new home. Our plan would be to rent out this current home we have as it is in a good rental area. Any advice on how we can achieve this?” FHA loan rules, according to the official site at FHA.gov, include a restriction on issuing single-family mortgage loans to investors. Due to this restriction, the official site says, “FHA generally will not insure more than one mortgage for any borrower (transactions in which | more...

 

June 12, 2012

Bank Of America Settles Maternity Discrimination Claim

By Joe Wallace

A recent press release found at the official site for FHA/HUD announces, “Bank fund will compensate women denied loans because they were pregnant or on maternity leave”. According to the HUD press release 12-095, “The U.S. Department of Housing and Urban Development (HUD) announced today that Bank of America has agreed to pay up to $161,180 to settle allegations that one of the bank’s San Jose, California branches refused to refinance the mortgage of an Irvine woman because she was on maternity leave. HUD reached the agreement with Bank of America to resolve a Fair Housing Act complaint that had been filed by the Fair Housing Council of Orange County (FHCOC).” Those applying for any kind of home loan–including FHA guaranteed mortgages–may not be discriminated against due to pregnancy, family | more...