Articles Tagged With: Escrow

How much can I borrow with an FHA refinance loan?

January 20, 2017

FHA Updates PACE Policy

A new mortgagee letter updates FHA loan policy on properties bought with FHA loans that are “encumbered with a Property Assessed Clean Energy obligation”. Mortgagee Letter 2017-06 updates PACE policy starting with a reminder; “The terms and conditions of a PACE obligation may vary by state, local government, and PACE program. Generally, a PACE obligation is secured and collected in the same manner as a special assessment is treated by the local government; funds obligated are not paid directly by the Borrower to the party providing the PACE financing.” When the sale happens (including foreclosure sales), if a property has “outstanding PACE financing” the obligation will, according to the mortgagee letter, “continue with the property causing the new homeowner to be responsible for the payments on the outstanding PACE amount. | more...

December 15, 2016

FHA Loan Basics: A Reader Question

By Joe Wallace

A reader asks, “I really don’t understand why i have to pay PMI and MIP. I had credit problems a bankruptcy in 2013 , it was recorded and its been almost 4 years and my score is 709 that the middle score i have hardly no debts, 6% of income. I was told I have to pay the MIP up front of 1.75% and also 240 PMI monthly with mortgage. That’s a little too much, is there a way out of this? I also did not want taxes and insurance added, I’m putting 3.5 percent down. My loan officer said I had to pay the insurance and add taxes to my loan.” It’s not entirely clear from this reader question whether the loan is an FHA mortgage or not, but | more...

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...

October 19, 2016

Mortgage Payments On FHA Loans: How Much?

By Joe Wallace

One of the most common questions about FHA mortgage payments is naturally, “How much will I have to pay?” And the answer is not as easy as you might think since there are a variety of factors that go into calculating the monthly mortgage payment. FHA loan limits, the amount of the loan the FHA will insure, don’t include the Up Front Mortgage Insurance Premium (UFMIP), for example. So you can’t simply divide the amount of your loan limit and divide by the number of mortgage payments you plan to make. In addition to UFMIP, there are other things to consider. For example, is the borrower planning on an FHA Energy Efficient Mortgage (EEM)? This option allows the addition of extra funds for approved upgrades or improvements to the home, | more...

What if my home was damaged in a natural disaster?

September 28, 2016

FHA Construction Loans: A Reader Question

By Joe Wallace

A reader asks, “Does FHA include loans for a construction to permanent mortgage?If so, can the construction be done by a licensed general contractor that does custom builds or does it have to be done by a licensed general contractor that only does spec builds? Is there other criteria/inspections that are specific to construction to permanent mortgage that are specific to an FHA loan?” This is a complex question, and FHA construction loans have issues far too numerous to address in a single blog post, but we’ll tackle the basics. FHA loan rules do allow for loans for new construction/proposed construction. This type of loan is more complex than a typical FHA mortgage and potential applicants are encouraged to discuss this option with a loan officer to learn what may | more...

July 21, 2016

FHA Revises HECM Policy To Include Third Party Tax Verification Fee

By Joe Wallace

FHA loan rules for Home Equity Conversion Mortgages (HECM) have been modified by the agency to include approval of third party fees for property tax verification. According to FHA Mortgagee Letter 2016-10, the third party fees will be added to the list of approved charges associated with FHA HECM loans, but the verification fees must meet FHA requirements. “A Third Party Property Tax Verification Fee is a fee charged to the mortgagee by a third party to verify the mortgagors property tax payment history and the annual amount of property taxes due for a specific property” states the FHA Mortgagee letter. “FHA is adding the Third Party Property Tax Verification Fee to the list of allowable charges and fees that may be paid by the mortgagor.” According to the mortgagee | more...

July 20, 2016

FHA Loans For Properties With PACE Assessments

By Joe Wallace

The FHA has announced it will insure mortgages on qualifying homes that have PACE assessments. According to a press release on the FHA/HUD official site, the move was initiated to help encourage the use of clean energy. “In order to enable homeowners seeking clean energy technologies in their homes to leverage a range of financing options, the Federal Housing Administration (FHA) today announced guidance that makes clear the circumstances under which it will insure mortgages on properties that include Property Assessed Clean Energy (PACE) assessments. FHA will now approve purchase and refinance mortgage applications in states that treat PACE obligations as special assessments similar to property taxes.” That’s according to the July 19, 2016 press release, which explains that the reason PACE assessments have been troublesome in the past is | more...

June 7, 2016

FHA Reverse Mortgage Questions And Answers

By Joe Wallace

The FHA reverse mortgage, also known as a Home Equity Conversion Mortgage, is a special type of FHA mortgage loan. Not everyone can qualify for an FHA reverse mortgage-there are specific age requirements, occupancy requirements, and more. We are often asked about reverse mortgages, here are some of the most commonly asked FHA HECM loan questions and their answers. Who can qualify for an FHA HECM / Reverse Mortgage loan? The FHA reverse mortgage program (HECM loans) is intended for borrowers aged 62 or older who either own their property outright or are very close to doing so. Proof of loan payoff will be required, and all FHA HECM loan applicants will be required to certify that the home securing the reverse mortgage is the primary residence and not a | more...

May 12, 2016

FHA Appraisals and Roof Issues: A Reader Question

By Joe Wallace

A reader got in touch with us recently to ask about FHA loan rules for a home in need of certain types of repair. “If the home needs a new roof, will FHA allow a clause or let money sit in escrow for roof repairs after closing?” While the question is too general to give a specific yes or no answer to, there is at least one option that may be possible. Much depends on what the FHA appraiser recommends for that property. Does the roof need to be replaced completely? Or are there simple repairs required? Has the appraisal happened yet, or is the borrower aware of a situation with the roof that could interfere with loan approval unless repaired or corrected? An FHA appraiser will recommend corrections in | more...

April 15, 2016

FHA Loan Rules In HUD 4000.1: Escrow

By Joe Wallace

FHA loan rules in HUD 4000.1 have several things to say about escrow accounts. FHA loan rules don’t require escrow for every single home loan or refinance loan, but there are cases where escrow is a must and there are also lender standards which may require setting up an escrow account to pay certain expenses associated with the transaction. FHA loan transactions may require escrow for payments to builders in association with construction loans, rehab loans or reverse mortgages. The standards and circumstances vary from loan to loan, so if you aren’t sure whether an escrow account is needed for your FHA loan transaction, discuss your situation with the loan officer. In some cases escrow is used to pay property taxes, in others it may be used to disburse funds | more...