Articles Tagged With: FHA Appraisals

July 30, 2013

FHA Loan Answers: Buying Homes From Family Members With An FHA Mortgage

Here’s a question about FHA loans that isn’t as common as some, but still comes up often enough to discuss here: can a family member purchase a residence from another family member using an FHA mortgage? FHA home loans have rules designed to protect the integrity of the loan process–FHA loan rules in HUD 4155.1 say that some FHA loan transactions may have different or lower loan amounts depending on the circumstances of those loans. “Certain types of loan transactions affect the amount of financing available to a borrower and how the maximum mortgage amount is calculated. These transactions include identity-of-interest properties with non-occupying coborrowers three- and four-unit properties properties where a house will be constructed by a borrower on his/her land, and/or as a licensed general contractor payoffs of | more...

July 26, 2013

FHA Loan Downpayment Sources: A Reader Question

By Joe Wallace

A reader asks, “Can I use money from a residential loan or my thrift savings towards a FHA downpayment and closing costs?” The rules that cover down payment funds for FHA insured mortgages are found in HUD 4155.1, Chapter Five. That chapter begins by stating, “Under most FHA programs, the borrower is required to make a minimum downpayment into the transaction of at least 3.5% of the lesser of the appraised value of the property or the sales price. Additionally, the borrower must have sufficient funds to cover borrower-paid closing costs and fees at the time of settlement. Funds used to cover the required minimum downpayment, as well as closing costs and fees, must come from acceptable sources and must be verified and properly documented.” Specifically, the reader wants to | more...

July 25, 2013

FHA Loans and Your Credit

By Joe Wallace

For some borrowers, the credit approval process is a mystery, especially when it comes to FHA home loans. Do you understand what the lender needs in order to approve a home loan application? Borrowers should understand that FHA loan approval is based on several factors including FICO scores, debt to income ratio, but also the repayment history shown on your credit report. FHA rules and instructions to the lender on this area are found in HUD 4155.1 Chapter Four. In Section C, we get some insight into this process and how the lender is supposed to evaluate your repayment history as found in a credit report: “Evaluating credit involves reviewing payment histories in the following order: • first: previous housing expenses, including utilities, • second: installment debts, • third: revolving | more...

July 25, 2013

FHA Loans After Chapter 7 Bankruptcy: A Reader Question

By Joe Wallace

A reader asks, “I filed chapter 7 in March 2010 and discharged in June 2010. I had a home included in the bankruptcy but after the two year waiting period the lender told me I had to wait an additional three years from the time of the final sale of the property which was not until March 2013. So are they correct in stating that it is a five year waiting period before I can qualify for an FHA loan?” FHA loan rules for FHA mortgages applied for in the wake of a Chapter 7 Bankruptcy are found in HUD 4155.1 Chapter Four, Section C, which states the following: “A Chapter 7 bankruptcy (liquidation) does not disqualify a borrower from obtaining an FHA-insured mortgage if at least two years have | more...

July 24, 2013

“No Credit Check” FHA Loans: A Reader Question

By Joe Wallace

A reader asks, “In regard to not all FHA streamline loans require a new credit check. What is the criteria required for FHA loans that do not require a credit check and/or appraisal?” FHA new purchase home loans do require a credit check and an appraisal, as do all FHA cash-out refinance and Home Equity Conversion Mortgages or HECM loans. There is no such thing as a no-credit check FHA loan for a new purchase transaction or for any transaction that includes cash back to the borrower that is not in the form of a bona fide refund. Certain exceptions may be possible for FHA energy efficient add-ons for a Streamline Refinance loan, depending on the circumstances. The FHA Interest Rate Reduction Refinance Loan or Streamline Refinancing loan is the | more...

July 22, 2013

FHA Loan Reader Questions: A Few Basics:

By Joe Wallace

A reader asks, “Why is there no website that shows you what income qualification rules might apply for an FHA loan ? Is there a maximum income allowed for a first-time, unmarried, home buyer?” There’s a simple reason where there is no website that details income qualification rules for FHA home loans when it comes to maximum loan amounts, first-time home buyer preferences and whether marital status itself affects an FHA home loan application: these are generally not factors. That’s NOT to say that your marital status or income might not affect your FHA loan. Far from it. Married borrowers applying for a loan together may have a better chance based on income factors and other aspects than a single borrower. (Two applicants applying together may also have its share | more...

July 17, 2013

FHA Streamline Refinance Loans: Adding or Deleting Borrowers To The Title

By Joe Wallace

When borrowers with existing FHA mortgages want to apply for streamline refinancing, one question that sometimes comes up is whether or not a borrower is permitted to add or delete someone from the title of the loan at the time of refinancing. FHA loan rules do address this issue. Those rules are found in HUD 4155.1, Chapter Six, Section C under a section titled Borrower Additions or Deletions to the Title on a Streamline Refinance. The concern for some borrowers is whether or not adding or deleting someone might trigger the due-on-sale clause making the entire loan amount payable according to the terms of the clause. The FHA does permit additions and deletions to the title as described in Chapter Six: “Individuals may be added to the title on a | more...

July 17, 2013

Credit Qualifying FHA Streamline Refinances

By Joe Wallace

FHA Streamline Refinances are designed to lower a borrower’s monthly payments and/or get a lower interest rate. For many borrowers this is a no-appraisal/no new credit application type of loan. But in some cases, a borrower’s payments may actually increase with a streamline refinance loan depending on whether permitted add-ons are included in the loan amount. In cases where the payments increase to 20% or more, there is a credit-qualifying requirement for the new loan. This requirement is found in the FHA loan rules for Streamline Refinancing loans, which say: “A credit qualifying streamline refinance must be considered when a change in the mortgage term will result in an increase in the mortgage payment of more than 20% when deletion of a borrower or borrowers will trigger the due-on-sale clause | more...

July 15, 2013

FHA Loan Reader Questions: Mortgage Insurance and Down Payments

By Joe Wallace

A reader asks, “If a buyer is making a 25% down payment on a home purchase, is the mortgage insurance premium mandatory? This down payment is for a home sale that is appraised for the sale price or higher.” FHA loan rules for mortgage insurance premiums changed in early 2013. There were several changes, but one of them was to eliminate the exemption for mortgage insurance for those making a large down payment. According to the FHA/HUD official site, FHA mortgagee letter 2013-04 “rescinds the automatic cancellation of the annual MIP collection” announced in previous mortgagee letters (ML) and also “rescinds ML 2011-35, under which mortgages with terms of 15 years or less and LTVs of less than or equal to 78 percent at time of origination were exempt from | more...

July 12, 2013

FHA Loan Reader Questions: Is There A List Of Acceptable Down Payment Sources?

By Joe Wallace

A reader asks, “I am trying to find the complete FHA list of acceptable sources for down payments. For example, can a client refinance an existing land or home loan as a source of obtaining the necessary funds needed for downpayment?” FHA loan rules are very specific about acceptable sources of down payment funds. A borrower is required to make a minimum cash investment or down payment of at least 3.5% for a typical new-purchase FHA mortgage. That 3.5% can come from the borrower’s own funds, or be a bona fide gift, or come as the result of the borrower cashing out investments, bonds or other resources. What exactly IS the down payment a percentage of? How does the borrower know what to expect in this area? The FHA loan | more...