Articles Tagged With: FHA Appraisals

June 10, 2014

FHA Refinance Loan Rules For Payments Before and After The New Loan

FHA refinance loan advice includes a variety of recommendations about creditworthiness. For example, you should make sure you have 12 months of on-time payments on your credit record before you apply for a refinance loan, especially when applying for cash-out refinancing loans. But what about the timeliness of your original mortgage payments? Borrowers who have made all their payments on time and are about to refinance may wonder if, because of the timing of an FHA refinance transaction, two payments might be required in a single month. Can’t the borrower skip the final payment on the old mortgage before the new one kicks in? The rules for refinance loans found in HUD 4155.1 Chapter Three instruct the lender to make sure the borrower is current and paid up all the | more...

June 9, 2014

FHA Loan Policies on Foundations: A Reader Question

By Joe Wallace

A reader asks, “My fiancé bought an FHA house. The foundation is cracked in several places. We just find the last wall of the basement has been leaking. The owners clearly knew the basement was leaking before the sold it. There are signs of it being covered up. Isn’t he protected from something like this in FHA loan policies?” A home that is classified as new existing construction may or may not be covered in a builder’s warranty for certain structural issues, depending on the age of the property and the nature of the construction agreement–without knowing whether a warranty is in effect, it’s difficult to say whether a borrower has recourse but one thing is certain. All new purchase FHA loans require an appraisal, but a home that passes | more...

June 6, 2014

National Home Ownership Month

By Joe Wallace

The FHA and HUD have announced June as National Home Ownership Month, an effort to raise awareness of a variety of issues including the recent push to expand FHA loan access to under served borrowers through a special program known as HAWK, or Homeowners Armed With Knowledge. HAWK is particularly relevant to FHA borrowers because it could potentially save program participants about $10 thousand over the lifetime of an FHA home loan. HAWK is a new program under development, and according to the FHA/HUD it’s viewed as a key part of saving the American Dream of home ownership for borrowers current and future. “Under the HAWK pilot program, homebuyers who commit to housing counseling will qualify for tangible savings on their FHA-insured loans. The average buyer would save approximately $325 | more...

February 26, 2014

FHA Loan Reader Questions: Roof Requirements

By Joe Wallace

A reader asks, “For an FHA loan, are there roof requirements on a detached garage or do the requirements solely apply to the roof over the home?” FHA loan rules for property analysis can be found in HUD 4150.2. Under the “Roof” section we find the following: “The covering must prevent moisture from entering and must provide reasonable future utility, durability and economy of maintenance. When re-roofing is needed for a defective roof that has three layers of shingles, all old shingles must be removed before re-roofing…The appraiser must observe the roof to determine whether the deficiencies present a health and safety hazard or do not allow for reasonable future utility.” The rules do not make a distinction between attached garages or detached garages, but the line about future utility | more...

January 31, 2014

FHA Loan Occupancy Rules: A Reader Question

By Joe Wallace

A reader asks, “With a FHA Arm 5/1 or Section 251 loan, how long do I have to live in the house before I can sell it?” This may seem like a tricky question. FHA loan rules for single family home loans found in HUD 4155.1 do list occupancy requirements. According to Chapter Four: “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’s principal residence within 60 days of signing the security instrument, with continued occupancy for at least one year.” But that rule says nothing about the borrower’s ability to sell the property. Borrowers are | more...

January 30, 2014

FHA Loan Refinancing: What You Should Know

By Joe Wallace

If you’re interested in refinancing your home loan with an FHA loan but have never explored your refinancing loan options before, there are a few things you should know about the FHA refinancing loan program that can help you make the best choices for your needs and wants. The rules which govern FHA loan refinancing are found in HUD 4155.1, Chapter Three (and elsewhere). In this portion of the FHA loan rulebook. we learn that FHA refinancing loans include the following: streamline refinances of existing FHA-insured mortgages made with or without appraisals no cash out refinances (rate and term) of conventional and FHA-insured mortgages, where all proceeds are used to pay existing liens and costs associated with the transactions cash out refinances How long a term is an FHA loan | more...

January 29, 2014

FHA No-Cash Out Refinancing Loans (With Appraisal): Basic Rules

By Joe Wallace

There are plenty of reasons to refinance a home with an FHA no-cash-out refinancing loan–taking advantage of lower interest rates is one of those good reasons, as is getting into a lower mortgage payment. The FHA offers a variety of refinancing options for single family home loans–what are the basic ground rules for an FHA no-cash-out refinancing loan? For starters, the amount that can be refinanced is, according to HUD 4155.1 Chapter Three Section B, “is the lesser of the 97.75% Loan-To-Value (LTV) factor applied to the appraised value of the property, or existing debt. The total FHA first mortgage is limited to 100% of the appraised value, including any financed upfront mortgage insurance premium (UFMIP).” Chapter Three adds that in general, the maximum mortgage cannot exceed the “statutory limit, | more...

January 24, 2014

Can FHA Home Loan Closing Costs Be Financed? A Reader Question

By Joe Wallace

A reader asks, “I have read in several places on the web that it is possible to finance your closing costs into a FHA loan. However, many of these sources are at least a couple of years old. Is this possible?” To start, let’s examine what the FHA official site has to say about FHA loans and closing costs. At www.HUD.gov on the page titled Let FHA Loans Help You, we find the following: “FHA might be just what you need. Your down payment can be as low as 3.5% of the purchase price, and most of your closing costs and fees can be included in the loan. Available on 1-4 unit properties.” Some closing costs may be financed, some may be paid by the seller within the boundaries of | more...

January 23, 2014

FHA Loan Reader Questions: Trouble With The Home Purchased With an FHA Mortgage Loan

By Joe Wallace

A reader asks, “My granddaughter purchased a home with an FHA mortgage, which has some serious physical problems. Can you give me the address of someone or some department, to which she can address these problems?” Borrowers with FHA loan issues should contact the FHA directly by calling 1-800 CALL FHA. In situations like these, there are some important considerations to keep in mind. As we address these issues, we should point out that we don’t know in this particular case whether the borrower did or did not take the steps we recommend below. All we know is what’s in the reader question printed above and our advice shouldn’t be taken to imply the reader did or did not take said advice–we mention these things for the benefit of anyone | more...

January 22, 2014

FHA Loan Reader Questions: Getting Behind on an FHA Mortgage

By Joe Wallace

A reader asks, “Let’s say a borrower misses a month’s payment. The next month, they have enough money for one payment, but not the two months that they owe. Can the lender tell them not to pay until they have enough money for *all* that they owe, preventing them from at least not getting further behind in their payments? This feels unethical; is it legal?” Skipping payments on an FHA loan is a bad idea in general. The reader did the right thing by contacting the lender as soon as there was a problem making the payments–borrowers should always work closely with a lender in order to avoid going into FHA loan default and foreclosure. But in situations where the borrower isn’t sure if the participating FHA lender is helping | more...