Articles Tagged With: FHA Closing Costs

What Is The FHA One-Time Close Program? Part Two

June 26, 2017

What Is The FHA One-Time Close Construction Program? Part Two

What is the FHA One-Time Close / Single-Close Construction Program? In our previous blog post, we discussed the basics of this FHA construction loan program-what it means to the borrower seeking an FHA new construction loan and how having a single loan (instead of two loans as with typical construction loan situations) can be an advantage for the borrower. FHA One-Time Close mortgages are for those who want an FHA construction loan for a property that has yet to be built. They can be more complex than typical new purchase FHA loans, but for those who need a construction loan, One-Time Close has definite advantages. They include a single closing date, and an early mortgage loan interest rate lock that can potentially safeguard the borrower against rising mortgage rates should | more...

June 14, 2017

Closing Costs And Earnest Money For FHA Loans

By Joe Wallace

In a recent post we discussed FHA loan down payments and how the lender is required to verify that down payment money is coming from acceptable sources. Did you know the lender is also required to verify the sources of earnest money and funds to pay closing costs? It’s true-FHA home loan rules include requirements that these funds comply with FHA loan rules. For example, if your earnest money comes to you in the form of a gift, those gift funds must meet the rules and requirements of the FHA Loan Handbook HUD 4000.1 section titled Gifts (Personal and Equity): “Gifts refer to the contributions of cash or equity with no expectation of repayment.” This means your earnest money gift must never carry any strings attached. But that isn’t all-the | more...

May 31, 2017

After The FHA Loan Closes: FHA Loan Reader Questions

By Bruce Reichstein

A reader got in touch recently to ask an FHA loan question about the disposition of the property once the loan has closed. “After receiving the loan, are there any regulations on putting two other mobile homes on the property? They will not be on a permanent foundation. We are currently buying 15 acres of land in Texas.” FHA loan rules are clear about the status of a mobile or manufactured home that is purchased with an FHA mortgage loan-all such property types must meet FHA minimum standards and be affixed to a permanent foundation as a condition of loan approval. However, the FHA Single Family Loan Handbook, HUD 4000.1, does not address the condition of add-ons, improvements, or other modifications that happen after the loan has closed. A borrower | more...

May 2, 2017

Cash To Close And Earnest Money: FHA Loan Rules

By Joe Wallace

All home loans have requirements for cash to close the deal, earnest money, and down payments. The FHA loan rules for these are found in HUD 4000.1, which has instructions to the lender on how to verify and process these payments. For example, on page 296 of HUD 4000.1, we learn the following: “The Mortgagee may only consider assets derived from acceptable sources in accordance with the requirements outlined below. Closing costs, prepaid items and other fees may not be applied towards the Borrowers Minimum Required Investment” also known as the down payment. Sources of cash to close and earnest money must be properly documented by the lender. FHA loan rules do not permit non-collateralized loans such as credit card cash advances or payday loans to be used for the | more...

Can I get an FHA home loan if I owe back taxes?

January 26, 2017

FHA Loans and Credit Report Issues

By Joe Wallace

FHA home loans offer an alternative to the more strict requirements of conventional mortgages. FHA loans typically feature a lower down payment requirement than many conventional loans, and have more forgiving credit standards (though lender standards will still apply). Some apply for an FHA mortgage unsure of how their past credit activity or even their current FICO score might affect their chances at loan approval. If you are one of those people, there are some things you can do for greater peace of mind going into the loan process. The catch is that advance planning is required-it’s best to start preparing for a major financial commitment like a mortgage a full year or more before applying. The planning time is crucial since you will need to save up money for | more...

How much can I borrow with an FHA refinance loan?

November 29, 2016

FHA Loans Closing Checklist

By Joe Wallace

Borrowers who buy a home with an FHA loans or any other type of home loan, learn that their closing dates and other details become very important the closer the borrower comes to signing on the dotted line and taking possession of the home. To help borrowers manage all the details about closing, federal law requires the loan officer to provide a closing disclosure that details expenses, fees, and other information. The government’s watchdog agency, the Consumer Financial Protection Bureau (CFPB) at ConsumerFinance.gov says of this disclosure, “Lenders are required to provide your Closing Disclosure three business days before your scheduled closing. Use these days wisely”. The three day period before you close should be used to review your closing details-use it like a closing checklist to make sure everything | more...

May 18, 2016

Preparing For Your FHA Loan: Important Questions To Ask

By Joe Wallace

Are you in the planning stages for an FHA loan? Considering your refinance loan options? Regardless of which choice you’re making (new purchase or refinance) there are some important questions to ask yourself when preparing to apply. The first of those is one of the most important. “Am I giving myself enough time to prepare?” Some borrowers need more preparation time than others. If you don’t have 12 months of on-time payments on all financial obligations, for example, you should definitely take the time to make sure you bring that to the bargaining table. Lenders will be looking for that 12 months-or-better reliability to establish your creditworthiness. Some borrowers need more time to save up for certain closing costs and, in the case of new purchase FHA loans, the required | more...

May 5, 2016

FHA Loans and FICO Scores: Fact and Fiction

By Joe Wallace

Some potential FHA borrowers have questions about FHA loan credit score requirements. It’s easy to hear part of story when it comes to other people qualifying for an FHA mortgage and assume you’ve gotten all the facts, but the reality is that FHA loan rules and credit score requirements aren’t the whole picture. Lender standards also have a say in loan approval. That is why FHA loan rules, which specify a FICO score starting at 580 (for maximum financing), don’t have the final say. Lender standards also apply, and those standards (provided they are applied in accordance with federal law) will also factor into the application process. An FHA loan fact: FICO scores below 500 are not permitted. An FHA loan fiction: Anyone with a FICO score in the mid | more...

May 3, 2016

FHA Loan Rules: Cash to Close

By Joe Wallace

One of the most common questions we are asked in the comments section involves the nature of a borrower’s required minimum investment-the down payment-for an FHA mortgage. Some potential borrowers want to know if they can finance the down payment, others want to know if other closing costs might be counted as part of the down payment. In both cases the answer is no. Closing costs are separate from the borrower’s required 3.5% minimum down payment according to HUD 4000.1. Furthermore, the down payment must be paid in cash at or before closing time and cannot be financed into the loan amount. The money needed for a borrower’s down payment and certain closing costs are regulated by FHA guidelines. For example, a borrower can’t come up with a down payment | more...

May 2, 2016

Budgeting and Planning For Your FHA Loan

By Joe Wallace

If you are planning to apply for an FHA loan soon and are still in the planning stages of that loan, there are some expenses you can anticipate and save up for. Some borrowers may be interested in financing some of the costs associated with a new loan, but paying them up front can help save money over time. Those who choose to pay these costs up front are often looking at their mortgage loan over the long term. Those who choose to finance certain expenses where permitted may be trying to save money up front. Whichever option you choose, it pays to be an informed borrower-even if you know in advance you want to finance certain expenses. FHA loans and refinance loans have different rules for what expenses can | more...