May 14, 2012
FHA Loan Reader Questions: Chapter 13 Bankruptcy and FHA Loans
A reader asks, “I want to buy a home for my family using FHA financing. My credit, income, assets, and work history meet the FHA requirements. My wife
Articles Tagged With: Borrower’s Rights
May 2, 2012
FHA Appraisals: Who Is Responsible For Appraisal Quality?
One question about FHA home loans doesn’t usually come up unless someone in the FHA loan process is dissatisfied with the appraisal, but it’s a question asked often enough to be included in the FHA/HUD list of the most frequently asked questions: Who is responsible for the quality of an FHA appraisal? According to the FHA FAQ, “The lender is held responsible, equally with the appraiser, for the integrity, accuracy and thoroughness of an appraisal submitted to FHA for mortgage insurance purposes. FHA may pursue appropriate enforcement actions against both or either party for violations.” In Mortgagee Letter 2009-41, The FHA also says, “FHA requires that all appraisers performing appraisals of properties that will be security for FHA-insured financing be knowledgeable of FHA appraisal reporting requirements…” and, “Appraisals performed for | more...
April 13, 2012
Steps To An FHA 203(K) Fixer Upper Loan
Some FHA loan applicants are interested in what the FHA calls “Handyman Specials” or “Fixer-Upper Loans” known as the FHA 203(K) mortgage. The FHA 203(K) is a loan guaranteed by the FHA, issued through a private lender for the purpose of buying and repairing property at the same time. There is a down payment requirement, which according to the FHA is “approximately 3.5%” of the purchase and repair costs. FHA 203(K) mortgages are available for those who intend to buy and occupy the property, but non-profit agencies and government entities can also apply. According to the FHA official site, there are a series of steps the borrower takes to apply for a 203(K) loan. First, the buyer finds a suitable property to purchase and repair. According to the FHA, both | more...
April 10, 2012
FHA Loan Reader Question: Seller Contributions
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 ?”
March 28, 2012
Getting Started With An FHA Home Loan
Potential home buyers at the very start of their FHA home loan journey should take advantage of three free online resources that can help prepare the borrower. The first of these resources is the online mortgage calculator. These are offered by private agencies such as FHA.com, and by official government websites such as Ginnie Mae. The online mortgage calculator can help you plan and budget for an FHA home loan by showing you whether your current income is enough to qualify based on your monthly debts and other factors. Another important resource is the Department of Housing and Urban Development’s online Homebuyer’s Kit, which offers everything from a cost analysis of buying versus renting to learning about home buyer’s assistance programs in your state. This kit is fairly comprehensive and | more...
March 28, 2012
FHA Loan Questions: Interest Rate Caps
A reader asks, “Is there a limit to how much premium the lender can make on a loan? In other words is there a cap on the interest rate increase.
March 21, 2012
FHA Loan Reader Question: Divorce and FHA Loan Eligibility
A reader asks, “I am separated from my husband…and want to buy me a home. We do not have any children together and I do not want alimony, he can have the house we once shared. He has agreed. I am using a down payment from my 401k from my job. What do you know about these situations?” While this question is far too general to answer specifically, we can talk about some of the basic issues a borrower in this situation might face. The big question in this situation is whether the reader is obligated on the first home. FHA home loan applications are reviewed for three basic things–credit rating, debt-to-income ratio, and verifiable income. There are other issues, but for this reader question these are “the big three”. | more...
March 15, 2012
FHA Loan Reader Question: Collection Actions and Payment Agreements
A reader asks; “I have a student loan that was passed over to a collection agency. I came to a payment agreement with my case manager to pay $50 monthly payments. The original payment amount before collections was $200 a month. I have made consistent payments for 2 years now.” “I am set to close on a house in a few weeks. My mortgage lender is requiring a letter from my collection agency verifying our payment arrangement before I can close. I have called and talked to my case manager at the agency three different times and he is refusing to send any kind of validation letter to acknowledge the payment agreement. The payments have been set up on automatic draft out of my checking account which the agency set | more...
February 27, 2012
FHA Loan Reader Questions: Seller “Assistance” Limits
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 20, 2012
FHA Loan Reader Question: Self-Employed Borrowers
A reader asks, “Is it possible to get an FHA loan if the ‘gap’ in employment was due to starting your own business? I have 1099?s that show income, as well as pay stubs as a contractor with a contract in place. The company paying me wants to hire me full time as a w-2 employee.” FHA home loans require the borrower to verify employment, but the lender does not have to deny a loan simply based on alternative, non-traditional, or self-employment. However, the rules for these types of employment are a bit more stringent so that the loan officer may properly verify income. When you fill out an FHA loan application, you’re required to list your employment prior to the period of self-employment, plus list out specific details of | more...