Articles Tagged With: Cosigner

July 20, 2016

Using a Co-Signer With an FHA Mortgage Loan

The video above gives some basic information about what a co-signer is, but there are some other details you should know about using a co-signer. FHA loan rules governing cosigners and related issues are found in HUD 4000.1 in a variety of places. One of the first things you’ll learn about co-signing an FHA mortgage is that the cosigner will need to verify identity using a Social Security Number. FHA loan rules differentiate between a co-borrower, who has shared ownership of the property purchased with the FHA mortgage, and the co-signer, who does not. In some cases, community property laws for legally married couples may affect how co-borrowing or co-signing is carried out. FHA loan rules in HUD 4000.1 state: “To be eligible, all occupying and non-occupying Borrowers and co-Borrowers | more...

July 5, 2016

FHA Loans For Military Members

By Joe Wallace

There are a variety of reasons why a military member would consider buying a home with an FHA mortgage, including the desire to own a home instead of renting in a crowded military rental market. While it’s true that VA home loans are available for military members as part of their benefits, some may choose the FHA option instead. What should a military member know about FHA mortgages and refinance loans? The first thing some borrowers need to know is that, yes, it is possible to refinance a VA mortgage into an FHA mortgage loan. FHA refinance loans permit the refinancing of non-FHA mortgages for cash-out refinancing and “non-streamline” refinance options. You do not have to use your existing lender to refinance into an FHA mortgage, instead a borrower is | more...

June 24, 2016

FHA Loan Questions: Co-Borrowers

By Joe Wallace

A reader asks, “My husband is a co burrower on his mothers mortgage loan and he has been asking her to remove his name from it but she hasnt. The mortgage has affected his credit and has made it hard to get a home of our own. Can his name be removed from the mortgage or is this something we need a lawyer for?” Before answering this question, let’s examine how the FHA defines the role of a co-borrower. Page 128 of HUD 4000.1 states: “To be eligible, all occupying and non-occupying Borrowers and co-Borrowers must take title to the Property in their own name or a Living Trust at settlement, be obligated on the Note or credit instrument, and sign all security instruments. In community property states, the Borrowers | more...

April 27, 2016

FHA Loan Rules For Credit Qualifying: Credit Reports For Each Applicant

By Joe Wallace

One of the most common questions about FHA home loans involves who gets their credit reports reviewed in the application process. FHA home loans permit co-signers, co-borrowers, and non-occupying co-borrowers, and with so many options open to the applicant(s), it can be confusing when trying to figure out who will need to furnish what information in order to apply. FHA loan rules in HUD 4000.1 instruct the lender on who is to have credit reporting data pulled. On page 171 we learn: “The Mortgagee must obtain a credit report for each Borrower who will be obligated on the mortgage Note. The Mortgagee may obtain a joint report for individuals with joint accounts.” But that’s not the only instruction to the lender. We also learn, “The Mortgagee must obtain a credit | more...

April 25, 2016

FHA Loan Borrower Ownership and Occupancy Requirements

By Bruce Reichstein

FHA loan rules for all single-family home loans, reverse mortgages, and refinance loans are found in HUD 4000.1. Those rules include a variety of instructions for the lender on how to process and approve FHA home loans. But there are also some regulations the borrower must follow, too. For example, FHA single family mortgage loans are intended for owner-occupiers only. HUD 4000.1 states that the borrower must take possession of the property within a reasonable time after closing, usually 60 days or less. There are also rules for borrower ownership and the nature of the borrower’s obligations under the FHA mortgage loan program. HUD 4000.1, page 128 has the following instructions: “To be eligible, all occupying and non-occupying Borrowers and co-Borrowers must take title to the Property in their own | more...

April 12, 2016

FHA Loans And Your Debt-To-Income Ratio: What You Should Know

By Joe Wallace

A borrower’s debt-to-income ratio or DTI is an important calculation the lender must make when processing an FHA home loan application. Your monthly debts, compared to your lender-verified income, will help determine your acceptability as a credit risk and your ability to pay your mortgage. But how does the lender process your debt information to arrive at the ratio? HUD 4000.1 establishes guidelines for the lender to follow in order to establish the borrower’s DTI. On pages 249 and 250 we find the following: “The Mortgagee must determine the Borrowers monthly liabilities by reviewing all debts listed on the credit report, URLA, and required documentation. All applicable monthly liabilities must be included in the qualifying ratio.” Some types of debt may be omitted by the lender in certain cases. For | more...

March 15, 2016

FHA Refinance Loan Basic Requirements

By Joe Wallace

FHA refinance loans offer a variety of options for the borrower. In many cases you don’t have to have an existing FHA loan in order to refinance into one; with certain types of FHA refinancing you do have to have an FHA loan. There are cash-out refinance loans available, no-cash-out, and streamline refinances available. Do you know which one is right for you? FHA loan rules found in HUD 4000.1 list the available types of refinancing available, as well as the borrower eligibility requirements, on page 126. It begins by stating: “FHA insures several different types of refinance transactions: 1. No cash-out refinances of FHA-insured and non FHA-insured Mortgages are designed to pay existing liens. These include: Rate and Term refinance, Simple Refinance, and Streamline Refinance. 2. Cash-out refinances are | more...

March 1, 2016

FHA Loan Rules: , Student Loans, Co-Signing and “Contingent Liabilities”

By Joe Wallace

We’ve gotten a variety of questions in the comments section in early 2016 about FHA loan rules for student loans, co-signing, and how the FHA loan program rules view things like deferred obligations and contingent liabilities. Those two terms can be a bit confusing, so it’s good to know what they are and how they can affect your FHA loan application. A deferred obligation is basically any arrangement that resembles a student loan deferment where an amount is owed, but the payment for that obligation may be reduced or delayed as part of an arrangement made between the lender and borrower. In cases where this type of debt is concerned, HUD 4000.1 states that the loan officer must: “…use the actual monthly payment to be paid on a deferred liability, | more...

November 9, 2015

Are FHA Loans Permitted For Living Trusts?

By Bruce Reichstein

Here’s a question that doesn’t come up that often, but is still an important aspect of the FHA loan program you might one day need to know: Are FHA home loans available for living trusts? The new FHA single family home loan rules published in HUD 4000.1 address this issue. The rules state: “The Mortgagee may originate a Mortgage for a living trust for a Property held by the living trust, provided the beneficiary of the living trust is a Cosigner and will occupy the Property as their Principal Residence, and the trust provides reasonable means to assure that the Mortgagee will be notified of any changes to the trust, including transfer of beneficial interest and any changes in occupancy status of the Property.” Note the occupancy requirement, which is | more...

September 23, 2015

HUD 4000.1 Questions: Occupancy

By Bruce Reichstein

With the publication of the new FHA Single Family Home Loan guidebook, HUD 4000.1, there have been some changes, updates, revisions and restatements of existing FHA loan policy. We’re examining the new rule book over time to discover what borrowers and lenders alike may need to know about FHA home loans under the new handbook. Occupancy is an important question/issue connected with FHA home loans. HUD 4000.1 states that there is a definite occupancy requirement for new purchase single-family home loans: “At least one borrower must occupy the property as their principal residence within 60 Days of signing the security instrument and intend to continue occupancy for at least one year.” There is also a requirement on non-occupying co-borrowers–they don’t have to live in the home but must meet the | more...