Articles Tagged With: Escrow

September 29, 2011

FHA Loan Questions: What Is The Maximum For An FHA Streamline Refinance Loan?

FHA rules for Streamline Refinancing Loans changed in 2011, and there are updated guidelines borrowers and lenders need to know when trying to determine what the maximum loan amount might be for a particular borrower. Under the old rules (for cases assigned before April 18, 2011) there were two sets of guidelines. One set was for FHA streamline refinancing without an appraisal. For these loans, the old system allowed refinancing maximums that did not exceed the principal outstanding balance, minus any up front mortgage insurance premium refund, plus the amount of the new up front mortgage insurance premium (UFMIP). The old FHA streamline limits also included a “with appraisal” maximum which was based on the lower of the outstanding principal balance minus any UFMIP refund, plus closing costs and prepaid | more...

September 9, 2011

The FHA Energy Efficient Mortgage

By Joe Wallace

With summer fading and the winter season only a few months away, many house hunters and home owners begin thinking about heating bills, weatherproofing, and other preparations for the cold weather season. In many areas where extreme weather is a typical part of the winter months, these considerations are even more important. For FHA borrowers who live in areas with seasonally high utility bills, there is help from the FHA in the form of the FHA Energy Efficient Mortgage or EEM. The FHA Energy Efficient Mortgage began as an experiment in 1992, expanding to a full-blown FHA loan feature in 1995. The FHA official site says of these loans, “All persons who meet the income requirements for FHA’s standard Section 203(b) insurance and can make the monthly mortgage payments are | more...

August 3, 2011

FHA Section 203(k) Loan Facts

By Joe Wallace

The FHA Section 203(k) loan, sometimes called a rehab loan, the Federal Housing Administration’s “primary program for the rehabilitation and repair of single family properties” according to the official site. The FHA 203(k) is sometimes used in partnership with state or local agencies, non-profits and other groups to rehab homes, but the 203(k) can also be used by individuals to purchase and repair individual properties. The 203(k) section at FHA.gov states, “When a homebuyer wants to purchase a house in need of repair or modernization, the homebuyer usually has to obtain financing first to purchase the dwelling; additional financing to do the rehabilitation construction; and a permanent mortgage when the work is completed to pay off the interim loans with a permanent mortgage. Often the interim financing (the acquisition and | more...

August 2, 2011

FHA Home Loans, Appraisals, and Mold

By Joe Wallace

When looking for a home to purchase with an FHA loan, some borrowers find themselves in a situation where the results of the appraisal recommend mold abatement. Some potential borrowers challenge the mold abatement requirement–you can find many Q&A forums on real estate issues where posters have stated, “I’ve searched and did not find any documents that say that FHA requires mold to be remediated.” FHA standards for homes to be purchased with an FHA insured mortgage loan include a requirement that the property be free from defects and conditions which could affect the health or safety of the purchaser. A borrower may not find a “chapter and verse” type statement saying “Mold abatement is required”, but the health and safety clauses built into FHA loan regulations can and do | more...

June 17, 2011

The FHA Energy Efficient Mortgage

By Joe Wallace

Making improvements in a new home to include energy efficient upgrades can save a borrower a lot of money in utility bills. Modern windows, solar powered water heaters, improved air conditioning systems and other upgrades are all within a borrower’s reach when purchasing a home with an FHA insured mortgage thanks to a feature called the Energy Efficient Mortgage. FHA Energy Efficient mortgages are for qualified borrowers buying a single family home. Under the terms of an FHA Energy Efficient Mortgage or EEM for short, energy efficient improvements must be selected by the borrower and the amount of energy savings the improvements would give every month. There must be a tangible benefit to the borrower in terms of energy efficiency and/or savings for each improvement. These savings must be calculated | more...

June 1, 2011

FHA Loans and Escrow Accounts

By Joe Wallace

The Real Estate Settlement Procedures Act provides powerful consumer protections when it comes to home loans. It establishes limits, requires lenders to be transparent when it comes to fees and expenses, and requires the borrower to be fully informed as to the costs of a home loan. FHA borrowers and conventional loan applicants alike are protected under RESPA. There are many protections, rules and requirements under RESPA, but one particular part of the act applies to escrow accounts for real estate loans. According to the FHA official site, “Section 10 of the Real Estate Settlement Procedures Act (RESPA) limits the amount of money a lender may require the borrower to hold in an escrow account for payment of taxes, insurance, etc. RESPA also requires the lender to provide initial and | more...

May 18, 2011

FHA Loans: When the Appraiser Recommends Repairs/Corrections

By Joe Wallace

A frequently asked question about the FHA appraisal process is, “What are my options for satisfying repair requirements on the appraisal?” According to FHA guidelines, any repairs required on the FHA appraisal report must be “satisfied” before the loan is submitted. There are four ways to satisfy the repair requirement–showing documentation to attest that the requirements have been met once the actual work has been done, including a Compliance Inspection Report, a Fannie Mae Appraisal Update (or a Completion Report), a Mortgagee Certification, or funds placed in escrow for the purpose of satisfying the repairs at a later date. Each one of these has its own requirements and situational application. For example, a Compliance Inspection Report must, according to the FHA official site, be “prepared by an appraiser or inspector” | more...

March 12, 2011

FHA Reverse Mortgages: What Makes Them Come Due?

By Joe Wallace

One of the most attractive features of an FHA reverse mortgage for some applicants is that the loan does not come due until the applicant dies or sells the property. There are no monthly mortgage payments on an FHA Reverse Mortgage, also known as an FHA Home Equity Conversion Mortgage. Instead, the loan is paid off as described above (when the owner dies or sells the home). The borrower–who must be age 62 or older–gets the proceeds from the loan to use as needed. But there are issues which could make a HECM loan due immediately–what could force the lender to call in the loan immediately? There are several scenarios. The terms of an FHA reverse mortgage require timely payment of property taxes, hazard insurance, and any other financial obligations | more...

February 1, 2011

FHA Loans, RESPA and Escrow

By Joe Wallace

The Real Estate Settlement Procedures Act or RESPA was created to protect FHA loan applicants and other borrowers. RESPA requires, among many other things, full disclosure to the buyer with regard to actual costs, obligations and other details of a home loan. RESPA prevents "gotcha" sales tactics in the real estate industry and makes the borrower and home purchasing experience more fair for everyone involved.

December 15, 2010

What Is the FHA Up Front Mortgage Premium?

By Joe Wallace

FHA borrowers who decide to refinance their home using the FHA Streamline program must make another UFMIP payment, but the good news is that any money in the original Up Front Mortgage Insurance account may be transferred to the new account. Some buyers who purchased homes with an FHA home loan after September 1, 1983 may be entitled to a refund or partial refund of FHA mortgage insurance money, See the FHA for more information.