Articles Tagged With: FHA Appraisals

January 17, 2014

FHA Minimum FICO Credit Score: A Reader Question

A reader asks, “I have Bankruptcy discharged June 1 2011. I do not have lots of credit. Have small inheritance from mother. I Want to purchase small house in Cleveland, Georgia. I have joined Equifax (663), TransUnion (718) and Experian (638). When I access each one has a score different than the other credit reporting agency. How can I determine my creditworthiness?” FHA loan rules say that in general, when a FICO score is available, the lender is required to use it to help determine a borrower’s creditworthiness. The credit score alone doesn’t tell the whole story–there are other factors that play a part in whether or not an FHA loan is approved–but it does play an important role The instructions for the lender on how to process credit score | more...

January 16, 2014

FHA Loans And Energy Efficient Mortgages

By Joe Wallace

Borrowers who choose the FHA Energy Efficient Mortgage (EEM) option as part of their FHA loan can get up to $8,000 in additional funds added to the loan amount for the express purpose of adding approved energy-efficient upgrades. According to the FHA loan rules in HUD 4155.1 , Chapter Six, “Once the borrower and the property are determined eligible for FHA-insured financing, the lender, using the energy rating report and the EEM worksheet, determines the dollar amount of the cost-effective energy package that may be added to the mortgage amount. The cost of any improvement to the property that will increase the property’s energy efficiency, and that is determined to be cost effective, is eligible for financing into the mortgage.The cost that may be added to the mortgage amount is | more...

January 10, 2014

FHA Loans And Outstanding Debt: A Reader Question

By Joe Wallace

A reader asks, “If you have those (FHA) minimum scores do you still have to pay some remaining debt on your credit report? What if most those are doctor bills, and do they have a special buyers program for people on disability?” Though this reader question isn’t entirely clear, it seems the main issue is whether having outstanding debt might be an issue when applying for an FHA home loan. The real question for the lender in cases like this is whether the debt is typical monthly payments or a delinquency which needs to be resolved. According to FHA loan rules, outstanding debt can be an important factor in FHA loan approval or denial: “Past credit performance is the most useful guide to • determining a borrower’s attitude toward credit | more...

January 10, 2014

FHA Loan Approval and Evictions: A Reader Question

By Joe Wallace

A reader asks, “I was ‘renting to own’ a house from a close family friend. For 3 years, I paid her mortgage payment and all household repairs/maintenance. She then decided after her parents death to move back to our home state and ultimately take her home back. I started working with a lender who said I qualified for an FHA loan…My ‘landlord’ or family friend only wanted to give me 4 weeks to move out after announcing that she changed her mind and wanted her house back, and there was no way I could do that. I ended up needing 6 weeks, but was just made aware that she filed a rule of evict w/ the local magistrate court…” “…Now my lender called me and says he can’t help me | more...

January 6, 2014

FHA Loan Down Payment Requirements: A Reader Question

By Joe Wallace

A reader asks, “I want to buy a house for $399,000.00…how much of a down payment will i have to make? I understand that banks require a 20% down payment. Does the FHA also require 20%? The minimum cash investment–a down payment on an FHA guaranteed mortgage–is set at 3.5%. However, there are many circumstances where a lender may require a higher down payment. This can include situations where a borrower’s FICO scores or other qualifying information are marginal or outside the usual range for FHA loan approval. A higher down payment can be considered a “compensating factor”. In cases where compensating factors need to be considered, a larger down payment is acceptable, but only if the down payment meets FHA guidelines. Those guidelines include a minimum 10% down, as | more...

January 2, 2014

FHA Minium Property Requirements: A Reader Question

By Joe Wallace

A reader asks, “What are the property condition requirements for an FHA loan? For example, what if the home is older and has a main panel of the fuse type instead of the newer circuit breaker type – are those okay if they as long as they pass inspection? Does the roof need to be certified if it is not new? Is there a publication I can reference for this type of information?” FHA loan minimum property requirements are just that–minimums. State or local building codes also apply, so it’s important to check with the local authority for specifics on things like circuit panels, carpet and roof requirements. The FHA has general minimum property requirements listed in Chapter 12 of HUD 4155.1, but for detailed information, the local authority must | more...

December 30, 2013

FHA Extends Deadline For 2014 Loan Limit Appeals

By Joe Wallace

The FHA has announced an extended deadline for appeals to the 2014 FHA loan limits for high cost areas. According to an announcement dated December 20, 2013, the FHA will allow “interested parties” in high-cost areas to submit an appeal until the end of January 2014. “On December 6, 2013, the Federal Housing Administration (FHA) issued Mortgagee Letter 2013-43 which announced FHA’s loan limits for case numbers assigned on or after January 1, 2014 through December 31, 2014. FHA is extending the date for interested parties to request a change to high cost area loan limits announced in ML 2013-43 from January 6, 2014 to January 31, 2014.” However, the appeal process is not open to all high cost areas. According to the FHA/HUD announcement, “Requests for a change to | more...

December 19, 2013

FHA Loan Closing Costs: A Reader Question

By Joe Wallace

A reader asks, “My husband and I are trying to buy a home. We have the 3-3.5% down required, I have $1500.00 for the realtor earnest money, the appraisal and the inspection. Is that all the money I will need up front. We are asking seller to pay closing. Since we can ask them that 6% goes to pay to closing. SO, if seller pays closing. I have money for the down payment, earnest money, appraisal and inspection- that will be all I need, correct?” It’s difficult to answer a question like this because every loan is unique. Some home loan purchases may require a flood zone determination, there may be certain legal fees if the borrower has paid for certain title services, state laws and tax code may apply, | more...

December 18, 2013

FHA Loans and Credit Improvement: A Reader Question

By Joe Wallace

A reader asks, “I’m looking to be a first time home owner by July 2014. My credit isn’t good (607 at this time). However, I’m looking to improve my credit score significantly by June. I’m unsure where to get started in the process of getting a mortgage loan. Just need some help with the very basics in getting started.” Borrowers who need to improve their credit scores before applying for an FHA home loan need to be realistic about how long it might take to do so. It’s strongly recommended that borrowers come to the FHA loan process with at least 12 months of on-time payments for all financial obligations before applying. Why is that? The answer can be found in the FHA loan rulebook, HUD 4155.1, which has a | more...

December 17, 2013

FHA Loan Reader Questions: Late Payments on Credit History

By Joe Wallace

A reader asks, “My wife and I have already completed home inspection,down payment and now must apply for FHA. We have already been officially told we qualify by score and income. I would like to know when mortgage companies look back at credit history and notice at least 3 creditor with late payments on them but I have the backing that I was in combat and wounded and not able at the time to pay it on time. I am 100% Disabled with VA award letters, can the company allow this as an acceptable excuse for not paying on time?” FHA loan rules on credit history are found in HUD 4155.1, Chapter Four Section C, which says: “Past credit performance is the most useful guide to • determining a borrower’s | more...