Articles Tagged With: Discount Points

December 28, 2015

Planning For An FHA Refinance In 2016?

Are you considering refinancing your home in 2016? There are several things you’ll want to consider planning, budgeting, or saving for in the new year. Having plans to examine these important issues connected to an FHA refinance loan can help you get organized and stay organized in the new year. Those issues include deciding on the type of loan, purchasing discount points, and the possibility of applying for extra funds to make energy efficient improvements in the home. For starters, it’s good to consider the type of refinancing you are interested in. Do you want lower payments and/or interest rates? Consider a Streamline FHA Refinance loan. Streamline refinances don’t have an FHA-required credit check or appraisal (though your lender is free to require one or both). For non-credit qualifying and/or | more...

December 7, 2015

FHA Refinance Loans: A Checklist

By Joe Wallace

Are you thinking about refinancing your home loan? There are many things you will want to consider in the planning stages that can help speed you to the application stage of your new loan. Here are some basics you should consider when saving and planning to refinance: The Type of Refinancing You Need Are you searching for a Streamline Refinance for your existing FHA mortgage loan? Or so you need to refinance from a conventional or other non-FHA mortgage into an FHA home loan? Do you want cash out? Or do you just need lower payments? All these factors are important to consider when choosing the FHA loan product that is right for you. An FHA Streamline has different rules and requirements than an FHA Cash-Out Refinancing loan. Know the | more...

Can I buy a manufactured home with an FHA loan?

November 24, 2015

Get Ready For Your FHA Cash Out Refinance Loan

By Joe Wallace

When you buy a home with a conventional, FHA, or other type of home loan product, one day you may wish to refinance to take advantage of the equity you’ve built up in the home. An FHA cash-out refinance loan can help you do that. With a little planning you can make the most of your refinance experience. The first step is to figure out how much time you need to prepare for the loan. There are closing costs, and a new credit application and appraisal will be required. Saving money for the appraisal is a good idea, and if you wish to purchase discount points on your cash out loan you can pay for them up front with reduced stress on your monthly budget if you take enough time | more...

October 19, 2015

CFPB Updates Home Mortgage Disclosure Act

By Joe Wallace

Friday October 15, 2015, the Consumer Financial Protection Bureau (CFPB) announced it is updating mortgage loan regulations–specifically the Home Mortgage Disclosure Act (HDMA)–to make the home loan process more transparent and easier to understand. According to the to the CFPB official site, HMDA requires, “many financial institutions to collect, report, and disclose information about their mortgage activity. The original law was enacted by Congress 40 years ago to respond to concerns that some banks may be failing to serve their communities.” HMDA, the press release states, is a statute that provides “the public and policymakers with information about the mortgage market and ensures market transparency.” What does the HDMA do? According to the Consumer Financial Protection Bureau, it: –Helps to show whether lenders are serving the housing needs of their | more...

August 26, 2015

Choices To Consider For Your New FHA Home Loan

By Joe Wallace

Are you considering an FHA home loan? You’ve got plenty of options open to you, but sometimes it’s good to review those options to make sure you aren’t missing any potential avenues for savings or better opportunities. The choice of lenders is the first thing many borrowers think of when they consider their FHA loan options. It’s perfectly reasonable to consider using the bank you currently have to work with on an FHA loan, provided that company is a participating FHA lender. But what if your lender doesn’t offer FHA loans, or restricts their offerings to areas you aren’t currently interested in? Some borrowers want to finance condo loans, manufactured housing or mobile homes, etc. Does your lender offer loans for these purchases? Shopping around for a new lender is | more...

August 17, 2015

FHA Mortgage Loan Interest Rates

By Joe Wallace

FHA home loans have a set of rules that govern interest rates. HUD 4155.1 explains that lenders must inform the borrower that FHA loan interest rates are negotiable–FHA does not set or regulate the rates, though it does require interest rates on FHA loans to be reasonable and “customary” compared to similar loans of its type. Chapter One of HUD 4155.1 states: “Under all currently active FHA single family mortgage insurance programs, the borrower and the lender negotiate the interest rate and any discount points.” We write regularly about FHA loan interest rate trends, and discuss something called the interest rate lock or interest rate lock-in, which is an agreement between the borrower and lender to commit to a mortgage rate for a specific period of time, to protect the | more...

August 12, 2015

FHA Refinance Loan Maximum Mortgage Calculation

By Joe Wallace

In recent posts we have discussed the maximum mortgage amount for FHA home loans. The borrower is required to make a minimum down payment on all new purchase FHA mortgage loans (3.5%) so that the maximum financing allowed would be 96.5%. Some borrowers may have to make larger down payments depending on credit scores and credit history. The FHA’s loan-to-value maximums can also be different depending on the type of transaction. With those ideas in mind, what are the FHA loan rules for refinance loans? For non-streamline, appraisal-required FHA refinance loans that feature no cash back to the borrower, FHA loan rules say the following: The maximum mortgage for a no cash out refinance with an appraisal (credit qualifying) is the lesser of the –97.75% Loan-To-Value (LTV) factor applied to | more...

August 7, 2015

FHA Loan Fees Which Are Not Considered Closing Costs

By Joe Wallace

There are a variety of fees and expenses associated with FHA home loans; typical costs that the borrower should be saving up for during the planning stages of a new home loan. The FHA requires a minimum 3.5% down payment, for example, and that down payment is considered separate from the borrower’s closing costs. And then there are expenses which are not considered part of the down payment OR closing costs. The FHA loan rules found in HUD 4155.2 at the time of this writing explain these costs. Discount points (a prepaid amount designed to lower the interest interest rate) are included in such expenses–not a down payment, not a closing cost. Chapter Six of HUD 4155.2 describes discount points as follows: “Discount points charged by the lender on a | more...

July 20, 2015

FHA Loans, Seller Concessions, and Cash To The Borrower

By Joe Wallace

We recently got a question about an FHA loan situation where the seller of the home agreed to pay 3.5% of the closing costs on a transaction. According to the reader question, the “actual permitted seller concessions” were much lower. The reader asked, “Since FHA would not allow cash back”, the buyer asked the seller for the difference of the two amounts to be paid to the borrower, “outside of closing” The question the reader asks: Is this legal? FHA loans do not permit cash back to the borrower except in the form of refunds. However, HUD 4155.2 does include some guidelines for seller concessions, which are limited to six percent of the sales price. Those guidelines do permit “monetary gifts” as we’ll read in a moment. Chapter Four of | more...

When Is An FHA Loan Better Than A Conventional Loan?

July 14, 2015

FHA Refinance Loans: With Appraisal Or Without Appraisal?

By Joe Wallace

For borrowers examining their refinance loan options, it’s important to know what kind of refinance loan you want so you can plan ahead for expenses that might be related to the loan such as appraisals and up-front closing costs. Some borrowers assume that certain types of refinancing never require an appraisal, but this is not true–FHA loan rules for Streamline Refinancing, for example, say that no appraisal is required by the FHA but the lender may ask for one regardless. This surprises some applicants, and we get a fair number of inquiries asking if certain lender policies (including “appraisal required” streamline loans) are legitimate. “My understanding is that the FHA rules don’t require an appraisal for this refinance loan. My lender says I will need one for my streamline refinance | more...