Articles Tagged With: FHA Appraisals

July 11, 2013

FHA Streamline Refinance Loans With Appraisals

FHA refinancing loans include something known as a Streamline Refinance option; the FHA Streamline Refinance allows a borrower with an existing FHA mortgage to apply for refinancing to lower mortgage rates or monthly payments. No cash back is permitted and no FHA-required credit qualifying is needed. Additionally, FHA Streamline loans have no FHA-required appraisal. But what about situations where there IS an appraisal with an FHA Streamline Refinance? FHA loan rules for no-appraisal streamline loans describe the maximum loan amount as follows: “The maximum insurable mortgage for streamline refinances without an appraisal cannot exceed the outstanding principal balance • minus the applicable refund of the UFMIP, • plus the new UFMIP that will be charged on the refinance. Note: The outstanding principal balance may include interest charged by the servicing | more...

July 10, 2013

FHA Loan Answers: Can I Add Appraiser-Required Repairs/Improvements Into My FHA Loan?

By Joe Wallace

When you want to purchase a home with an FHA mortgage, one of the most important steps after choosing the property is the appraisal. An appraisal is required in order to establish the fair market value of the home and to make sure the home lives up to FHA minimum property standards. Appraisals may result in some required improvements, corrections or alterations to the home in order to bring it up to minimum standards. In such cases, the appraiser may make FHA loan approval conditional upon the completion of these changes and require a compliance inspection to make sure the fixes or alterations now bring the home up to standard. In such cases, is the borrower permitted to include the cost of this work in the sales price of the | more...

July 3, 2013

FHA Loans: Broker and Agent Fees

By Joe Wallace

As with many other aspects of the FHA home loan process, there are rules and regulations that cover broker and real estate agent fees. Those rules are spelled out in Chapter Five of HUD 4155.1. In a section titled “Settlement Requirements Needed To Close” we find detailed rules on how such fees can be issued and paid. For example, FHA loan rules require real estate broker fees to be included in the HUD-1 settlement statement. The specific rule says, “If a borrower is represented by a real estate broker and must pay any fee directly to the broker, that expense must • be included in the total of the borrower’s settlement requirements, and • appear on the HUD-1 Settlement Statement.” The rules are different when the seller is paying a | more...

July 3, 2013

FHA Loan Reader Questions: FHA Rules on “Flipping”

By Joe Wallace

A reader asks, “Hello, can you help us with a couple of questions please. What does the FHA consider as a “Flip-it” property? How many days does this involve from an original sale of a property?” “Flipping” is defined by the FHA as the sale of a home purchased with an FHA loan within 90 days of the original sale. Under normal circumstances the FHA has anti-flipping rules in place that forbid this practice with homes purchased with an FHA-insured mortgage. But the FHA issued a waiver to these rules back in January 2010. It has since been extended more than once and the current waiver of FHA anti-flipping rules doesn’t expire until 2014. According to a November 2012 edition of The Federal Register, “FHA is extending the availability of | more...

July 2, 2013

FHA Loans and the Cash Needed At Closing Time

By Joe Wallace

When it’s time for you to close your FHA home loan, you’ll be required to pay cash up front for certain items not to be included in the loan amount. These items include Up Front Mortgage Insurance Premiums or UFMIP, and the down payment. But there’s also an issue related to any “per diem interest” that might occur if the loan did not close on the original date agreed upon. When it comes to that per diem interest, borrowers should know the FHA loan rules (spelled out in HUD 4155.1) governing the money paid at closing time. Chapter Five of HUD 4155.1 states: “The lender must use a minimum of 15 days of per diem interest when estimating prepaid items on the Good Faith Estimate (GFE). To reduce the burden | more...

July 1, 2013

FHA Loan Reader Questions: FHA Loan Rates for First Time Home Buyers

By Joe Wallace

A reader asks, “What is the current interest rate for a first time home buyer and what is the income level to qualify?” The short answer to the first part of this reader question is that there is no specific interest rate set for “first time home buyers” when it comes to FHA home loans. The interest rate on an FHA mortgage is negotiated between the borrower and the lender. While some institutions may have a first-time home buyer program, the FHA does not set the rates on FHA loans nor does it regulate them beyond general requirements to be typical for the housing market the loan is offered in. FHA loan interest rates can change depending on the nature of the markets that affect mortgage rates. Rates can change | more...

June 28, 2013

FHA/HUD Announce Relief For Alaska Flood Victims

By Joe Wallace

The FHA and HUD have issued a press release announcing relief for victims of recent flooding in Alaska. According to HUDNo.13-100, released Thursday June 27, 2013, “U.S. Housing and Urban Development Secretary Shaun Donovan today announced HUD will speed federal disaster assistance to the State of Alaska and provide support to homeowners and low-income renters forced from their homes due to recent flooding.” This assistance came after the President made an announcement declaring parts of Alaska affected by the flooding to be federal disaster areas. According to the press release, “President Obama issued a disaster declaration for Alaska Gateway Regional Educational Attendance Area, Copper River Regional Educational Attendance Area, Lower Yukon Regional Educational Attendance Area, Yukon Flats Regional Educational Attendance Area and Yukon Koyukuk Regional Educational Attendance Area.” The federal | more...

June 27, 2013

FHA Loan Questions: Seasoning Periods On FHA Streamline Refinance Loans

By Joe Wallace

A reader asks, “Is there a cutoff date for when the original mortgage (FHA) was started? I have been getting letters that I am prequalified and I finally called one lender today. After giving them all of my information so they could check my credit, they said I was not in the house long enough. From the info on this website and the FHA website I don’t see anything about the length of time.” The FHA issued guidance on this issue in 2011 with Mortgagee Letter 2011-11, which was a policy update on a variety of requirements for FHA refinance loan transactions in general, but specifically addressing issues such as the “seasoning period” for FHA loans before a borrower can apply for FHA refinancing. According to FHA Mortgagee Letter 2011-11, | more...

June 27, 2013

FHA Loan Reader Questions: FICO Score Minimum Requirements

By Joe Wallace

A reader asks, “Hello, my husband score is 623 and my score is 738, is there a FHA loan out there that would allow us to get a loan? I have read that some companies have stated that both parties must have at least a 650 or above.” Credit score questions are some of the most frequently asked when it comes to a new purchase FHA home loan. While it’s true that the FHA does have a set of minimum FICO scores listed (see below) there is one very important thing ALL borrowers should know about the FHA loan rules for minimum credit scores–they are the FHA’s minimums ONLY. A lender is free to require higher credit scores as long as such higher standards are consistently applied and in accordance | more...

June 26, 2013

FHA Loan Rules For Down Payments: Gift Funds and Approved Sources of Those Funds

By Joe Wallace

In a recent post we examined the FHA loan policy about down payments for new purchase home loans. FHA loan rules require all new purchase loans for single family residences to include a minimum cash investment from the borrower of 3.5%. That 3.5% must come from an approved source including the borrower’s own cash reserves, cashed-in investments, savings bonds or other holdings. The required down payment cannot come from what the FHA labels “non-collateralized loans” such as a payday loan, credit card cash advance, etc. The down payment money is permitted to come from a third party as a bona fide gift, as long as the source of that gift is acceptable under FHA loan rules. What are considered acceptable sources of gift funds for down payments? Before we can | more...