Articles Tagged With: Credit Requirements

December 22, 2010

FHA Appraisals : Are They Fair?

In our last post we discussed the cost and process of FHA appraisals. Since the FHA appraisal is such an important part of the FHA mortgage process--the loan amount can't be established without the appraisal--it's good to know how and why the process works the way it does. One of the key aspects of getting a fair, accurate estimate of the reasonable market value of a home is the independence of the appraiser. How does the first time FHA borrower know the FHA-approved appraiser is assigning value to the home for sale that's actually consistent with market practices rather than helping the lender raise the FHA loan amount by over-valuing the property?

December 22, 2010

How Much Does an FHA Appraisal Cost?

By Joe Wallace

Part of the FHA home loan process is establishing the reasonable value of the home for sale. The reasonable value is not necessarily the asking price, but rather the estimated market value of the property based on the work of a licensed, FHA-approved appraiser. The appraisal is a crucial part of the FHA loan process; without it, the loan can't move forward. The FHA will not insure or guaranty a loan amount for more than the reasonable market value of the property (with approved extra costs such as energy-efficient upgrades and other items approved by the FHA to be included in the FHA loan amount).

December 21, 2010

Do FHA Loans Have Minimum and Maximum Age Requirements?

By Joe Wallace

There are many myths to dispel about FHA home loans. The most popular ones include the notion that the FHA actually lends money (it doesn't) and the idea that if you earn "too much" money you can't apply for an FHA mortgage (you can). There are also myths about age. According to FHA rules, there is no maximum age limit for FHA borrowers. Anyone who qualifies for an FHA home loan is eligible to apply regardless of how old they are. All income, credit, and occupancy rules apply to FHA borrowers regardless of age, but there is no "cut off" point where the government would refuse to guaranty a loan simply because of how old the applicant may be.

December 20, 2010

How Much Do I Have To Make To Qualify For an FHA Home Loan?

By Joe Wallace

How much do I need to make to qualify for an FHA mortgage? That is among the most popular questions about FHA home loans. According to the FHA, there is NO minimum income requirement to apply. That said, the FHA does require a three-year employment record showing steady income during that time. Note that the requirements don't say you must have held the same job for three years, only that the income has been reliable. The fact is, in order to qualify for an FHA home loan, there is no one single determining factor that gets you approved or declined; the FHA examines a combination of factors to determine an applicant's overall credit worthiness and ability to pay the FHA mortgage on time every month.

December 17, 2010

Does the FHA Have Rules For Employees of Family Businesses?

By Joe Wallace

When an FHA loan applicant completes paperwork for the first time, they may notice the FHA has different requirements for those who are self-employed than for those who are employees. If you work for an employer, your income reporting requirements are comparatively simple; self employed FHA borrowers must furnish tax returns and other business documentation to prove a regular, dependable flow of income from their business ventures. But what about FHA borrowers who don't own their own business but are employed by a business owned and operated by their family?

December 17, 2010

What is the HUD-1 Settlement Statement?

By Joe Wallace

he HUD-1 Settlement Statement is a document used to show buyers and sellers the full financial details of the transaction for the purpose to documenting who has paid or agreed to pay what costs, adjustments, etc. It also shows how much money the buyer needs to bring to the transaction up front in order to close the deal. The first page of the Settlement Statement provides the buyer with a list of all costs and related figures for both buyer and and seller. The area called Section J is for the FHA borrower while Section K lists the seller's part of the deal. Buyers are required to get Section J but they may not necessarily be furnished a copy of Section K, the seller's portion.

December 16, 2010

HUD Investigates 22 Banks for Alleged FHA Loan Discrimination

By Joe Wallace

One of the things a first time home buyer notices about the FHA loan process is the abundance of rules and regulations designed to protect the borrower from unscrupulous lending practices. Some of those rules are to prevent a buyer from getting cheated or enter into a predatory lending arrangement. But other FHA requirements are in place to make a level playing field for all applicants; all qualified FHA loan applicants must have access to the same industry-standard terms, conditions and quality.

December 15, 2010

What is an Illegal Referral Fee on an FHA Loan?

By Joe Wallace

The FHA requires those who do business with it to follow guidelines and regulations that protect both buyer and lender from unscrupulous practices. But FHA rules aren't all. Congress passed the Real Estate Settlement Procedures Act to prevent the practice of kickbacks and unethical referrals. According to the FHA official site, "RESPA was enacted because Congress felt that consumers needed protection from '... unnecessarily high settlement charges caused by certain abusive practices that have developed"...in some areas of the country."

December 14, 2010

FHA Closing Costs and Loan Origination Fees

By Joe Wallace

n our last blog post we discussed FHA loans and interest rates. Contrary to the impression some first-time home buyers may have, the FHA and HUD do not set or regulate interest rates on FHA mortgages. The FHA doesn't "regulate" closing costs but does have requirements which state lenders may charge what is "reasonable and customary". FHA requirements on closing costs also include the following from the FHA official site" "Aggregate closing costs charged to a borrower may not violate the FHA tiered pricing rules which prohibit a lender from charging higher prices for low balance loans than the lender charges for higher balance loans."

December 13, 2010

How Does The FHA Regulate Interest Rates and Closing Costs for FHA Home Loans?

By Joe Wallace

First time home buyers considering an FHA mortgage have many things to learn about the home loan process in general. In the home loan industry it's common, for example, to advise borrower to start getting ready for a home loan at least a year in advance--that comes as a surprise to many new applicants and sends some of the back to the planning stages just when they felt ready to commit to a loan application. For FHA home loans the usual learning curve also applies, but there are a few extra things to understand about FHA loans, especially when compared to conventional loans.