August 23, 2012
FHA Loan Reader Questions: Mortgage Insurance Payments
A reader asks, “We paid $6755.53 cash up-front-fee included in our mortgage in 2008.
Articles Tagged With: Fair Housing Act
August 22, 2012
What Does My Lender Need To Process My FHA Loan Application?
FHA loan rules specify a list of required documents and paperwork needed to process an FHA home loan properly. In addition to your application data, the lender needs a list of things in order to perform the “mortgage credit analysis”. Not all of these documents are supplied by the applicant, but some of the lender-generated paperwork requires the borrower’s permission in writing, such as the approval to pull credit reports from the three major credit reporting agencies Equifax, TransUnion, and Experian. The list of required documentation also includes “evidence of a Social Security number” which is usually your Social Security card or other documents the lender may accept as proof of your number. The lender must complete a verification of employment, which means following up on the data you provided | more...
August 21, 2012
What Are My Chances For An FHA Loan? Reader Questions
A reader asks, “I have good credit but my wife had a delinquent student loan. It is now up to date for the past two months. We only have two car payments, never been late. We also have (a) home in another part of the state since my job transferred me to a different city. What are the chances of us getting a loan?” Questions like this are hard to answer for several reasons–one of which is the reader doesn’t provide any credit score information. FHA home loans require the borrower to have a minimum credit score. In general, borrowers should not expect an FHA loan unless their credit score is at least 580 or better, and many lenders won’t approve a loan for borrowers with credit scores lower than | more...
August 21, 2012
FHA Streamline Refinancing: the Net Tangible Benefit Rule
FHA Streamline Refinancing loans have a set of requirements regarding the streamline loan’s benefit to the borrower–requirements that directly affect the borrower’s eligibility for such loans. According to the FHA loan rulebook, there must be a “net tangible benefit” to the borrower as a result of the streamline refinancing loan. The Federal Housing Administration has a specific definition of this term which must be met (with certain exceptions allowed). From HUD 4155.1 Chapter Six, Section C: “The lender must determine that there is a net tangible benefit to the borrower as a result of the streamline refinance transaction, with or without an appraisal. Net tangible benefit is defined as:
August 17, 2012
FHA Loans and Employment Verification
When you apply for an FHA mortgage loan, you’re required to list your employment history so it can be verified before loan approval. For borrowers who have had steady jobs with the same employer for two years or more, this isn’t a great cause for concern. Borrowers who have changed jobs more frequently than that may be worried that their job history might work against them on the FHA loan application. Is this fear grounded in reality? Or does the FHA make provisions for borrowers with recent job changes, a history of seasonal employment or other issues? According to the FHA loan rules found in HUD 4155.1, these issues are circumstantial and must be reviewed on a case-by-case basis to avoid discriminating against legitimate, qualified FHA borrowers who happen to | more...
July 31, 2012
FHA Loan Rules: Owner Occupancy
A reader asks, “When applying for an FHA loan, how long must I live on the property?” Assuming the reader wants to know how long he or she must own the home before it can be sold, borrowers with this question should know there FHA loan rules that do apply to occupancy and how long a seller has owned the property. For example, HUD 4155.1 Chapter Four Section B contains the FHA Requirement for Establishing Owner Occupancy, which states: “At least one borrower must occupy the property and sign the security instrument and the mortgage note in order for the property to be considered owner-occupied. FHA security instruments require a borrower to establish bona fide occupancy in a home as the borrower
July 26, 2012
FHA Refinancing Loans and Up Front Mortgage Insurance Premiums
A reader asks, “I refinanced my home with a lender March 2011. That same lender called me a couple of months ago and said they could refinance me again at a 1/2 % less than what I am paying now at no out of pocket costs.” “They are charging me upfront mortgage insurance premiums of over $2,000.00. Do I have to pay the FHA UFMIP again, or are the trying to stick me with junk fees?” FHA loan rules on this subject are found in Chapter Seven of HUD 4155.2, Refinancing Loans. According to the FHA; “In most of the FHA mortgage insurance programs, FHA collects an
July 18, 2012
FHA Loan Qualifying Factors–The Relationship of the Mortgage Payment to Gross Income
When a borrower applies for an FHA home loan, the lender must analyze the applicant’s debt-to-income ratio in order to approve the loan application. That ratio is basically described in FHA loan rules as the amount of verifiable income versus the amount of debt the borrower has. But that’s not the only factor in the equation when the lender is trying to insure the borrower is a good risk for an FHA mortgage loan. According to the FHA official site, the lender must establish whether the borrower can afford his or her current financial obligations AND the amount of the new obligations under the FHA mortgage. According to Chapter Four of the FHA loan rules (HUD 4155.1), “The relationship of the mortgage payment to income is considered acceptable if the | more...
July 16, 2012
FHA Loans and Military Service
A reader asks, “Can you still use the FHA while being stationed overseas and still active duty?” This is a fairly complex issue and the answer is dependent on circumstances. If an active duty military borrower wishes to purchase a home with an FHA mortgage loan while still stationed overseas, there are several questions to be answered, including how the borrower intends to execute the FHA loan application. Eligible borrowers who are able to fill out the application themselves may be able to clear this initial hurdle, but those who rely on a power of attorney should know the FHA rules on loan applications in these situations: In general the FHA rules state, “The initial mortgage loan application may not be executed by using a power of attorney, except in | more...
July 13, 2012
HUD Charges Minnesota Condo Association and Management Company With Fair Housing Act Violations
In spite of federal laws, conventional, VA, and FHA loan applicants sometimes experience discrimination when house hunting. While the most obvious types of discrimination involve bias against race, religion, sexual orientation, or national origin, there’s another type of discrimination that’s just as illegal and unfair–discrimination based on family status. According to a press release issued by the Department of Housing and Urban Development, a Minnesota condominium association and its management company, Gassen Company, Inc., have been charged by HUD with violating the Fair Housing Act, “by discriminating against families with children under the age of 18”. The press release says, “According to HUD