Articles Tagged With: FHA Appraisals

June 3, 2013

FHA Loan Reader Questions: Bankruptcy Issues

A reader asks, “I recently completed a debt reorganization on ch 11 bankruptcy. My plan is 5 years. I will not be discharged until then (5 years).” “However, I would like to refinance my mortgage loan. my credit score is bad because I am in bankruptcy for the next 5 years. Can I refinance ? Can a FHA loan help me and would they refinance my existing loan?” FHA loan rules have plenty to say about bankruptcy issues. For example, in HUD 4155.1 Chapter Four, we find the following: “A Chapter 7 bankruptcy (liquidation) does not disqualify a borrower from obtaining an FHA-insured mortgage if at least two years have elapsed since the date of the discharge of the bankruptcy. During this time, the borrower must have • re-established good | more...

May 31, 2013

FHA Loan Application Rules

By Joe Wallace

When some FHA mortgage loan applicants fill out their loan paperwork, it may be tempting to leave recent or new financial obligations out of that paperwork. In some cases it may be a simple oversight, in others it might be a question of an applicant mistakenly thinking that the lender won’t know or can’t find out. What’s the reality? FHA loan rules anticipate situations like these. In HUD 4155.1, Chapter Four, Section C, there’s a heading titled, “Recent and/or Undisclosed Debts or Inquiries”. It states: “Lenders must determine the purpose of any recent debts, as the borrower may have incurred the indebtedness to obtain the required cash investment.” That means that the lender must, among other things, determine whether the borrower has gone into debt in order to make his | more...

May 23, 2013

FHA Announces Assistance For Homeowners in Oklahoma

By Joe Wallace

The FHA and HUD have announced disaster relief for victims of the recent tornado in Oklahoma. According to HUDNo.13-078, “HUD will speed federal disaster assistance to the State of Oklahoma in addition to resources being provided by Federal Emergency Management Agency (FEMA) and other federal partners. HUD will provide support to homeowners and low-income renters forced from their homes due to tornadoes and severe storms.” U.S. Housing and Urban Development Secretary Shaun Donovan has also reiterated current Federal Housing Administration policy, “that mortgage lenders should release insurance payments to homeowners rather than applying these funds toward outstanding mortgage debt” according to the press release. On Tuesday May 21, 2013, the President made a federal disaster declaration for Oklahoma counties including Cleveland, Lincoln, McClain, Oklahoma and Pottawatomi. A federal declaration allows | more...

May 22, 2013

FHA Loan Reader Questions: Closing Costs

By Joe Wallace

A reader asks, “Can you have the closing costs added to your mortgage loan in California? Or do you have to pay them before escrow closes?” Let’s see what the FHA loan rules, as described in HUD 4155.1, have to say about this. Chapter Five, Section A has a heading titled Settlement Requirements Needed To Close, which states: “Lenders may pay a borrower’s closing costs, and/or prepaid items by ‘premium pricing.’ Closing costs paid in this manner do not need to be included as part of the seller contribution limitation. The funds derived from a premium priced mortgage • may never be used to pay any portion of the borrower’s downpayment • must be disclosed on the GFE and the HUD-1 Settlement Statement • must be used to reduce the | more...

May 21, 2013

FHA Loan Reader Questions: Foreclosure and the Three-Year Waiting Period

By Joe Wallace

A reader asks, “I had a home that Foreclosed in 2009. The Sheriff Sale was completed in December 2009, however according to the FHA office the claim on my home was not closed out until a little over a year later on January 14, 2011.” “Which means that instead of being in a position for another FHA Loan in 2012 we have to wait until January 2014, which is considered to be over 4 years since the Sheriff Sale. Why would it take so long between the Sale and the actual closing of the claim on the house? Is there anything I can do other than wait until 2014?” While we can’t address why it takes so long between a foreclosure and the sheriff sale, we can address the portion | more...

May 16, 2013

FHA Reader Question: FHA Loans For Second-Time Home Buyers

By Joe Wallace

There are many myths and misconceptions about FHA home loans. One of them is brought up in our latest reader question in the comments section. A reader asks, “Do we have to be first time home buyers to qualify for an FHA loan?” The simple fact of the matter is, anyone who meets the financial qualifications can apply for an FHA home loan. You do NOT have to be a first time home buyer to qualify, and the financial qualifications include having a steady, dependable income that is likely to continue. Your debt-to-income ratio plays a part in loan approval, so potential borrowers who worry their bills are too high to qualify should contact the FHA or the loan officer about the rules covering debt/income ratios. Borrowers who are second-time | more...

May 15, 2013

FHA Loan Questions: Well Water

By Joe Wallace

A reader asks, “Purchasing an existing home in rural county in Oklahoma. What are the FHA guidelines on water system? No rural water at property. It’s well water. Would FHA loan on that water supply?” It’s important to point out that the FHA does not loan money–the FHA guarantees the loan issued by a private lender. That out of the way, let’s examine what FHA loan rules say about wells in 4150.2, Property Analysis. In the section titled, “Individual Water Supply and Sewage Disposal Systems” we find the following: “If water and sewer systems are not connected to public systems, the water well and/or septic system must meet the requirements of the local health authority with jurisdiction.” That means the FHA won’t guaranty a loan for a property that has | more...

May 13, 2013

FHA Energy Efficient Mortgage Rules For Streamline Refinance Loans

By Joe Wallace

The FHA Energy-Efficient Mortgage (EEM) option is available for borrowers who want to apply for additional money to be used for energy-efficient upgrades on the home being purchased or refinanced with an FHA mortgage. An FHA EEM is subject to certain rules and requirements, especially when paired with a Streamline Refinance. For example, one of the requirements of a Streamline Loan is that the borrower must get a benefit from the refinance–usually in the form of lower interest or monthly payments. But with some FHA EEMs, the payments may actually go up. Is this permitted under the rules? HUD 4155.1 spells out when those higher payments may be allowed–the guidence is found in Chapter Six, Section D. Under “Streamline Refinance Transactions with EEM” where you’ll find the following: “For a | more...

May 9, 2013

FHA Loan Reader Questions: HOA Issues

By Joe Wallace

A reader asks, “The town home next door is ruined by fire in July 2012 and not repairing. Trash in carport…I have one wall connecting with that house and my roof is damaged too. I contacted the HOA (I pay $ 100 each month and they should repair roof, clean up territory, etc) but they will DO NOT make any repairs or clean-ups. Even broken sidewalk by broken unit not repaired! I contacted the City and few Code Enforcement officers show up, now is almost year gone but no repairs…I call Code Enforcement again, but they told me, ‘case in progress’ and nothing more. How I can save my house from damage from that broken unit next door – and make Association do the work and repair the roof and | more...

May 8, 2013

FHA Loan Reader Questions: Down Payments

By Joe Wallace

A reader asks, “I have applied for an FHA loan. However, the home price is over the FHA limit in our area. We have enough money to get to the maximum loan amount, but we are not clear if that will be sufficient or if we will still need an additional 3.5% on top of that?” “As an example only – Let’s say the house costs $365,000 but the maximum FHA loan amount is $330,000. If we put down 35,000 to bring the loan amount to $330,000 will we still be required to put down more money?” The answer to this question is a bit complex, but we’ll quote the FHA loan rules word-for-word for maximum clarity. According to the FHA loan rulebook, HUD 4155.1 Chapter Five Section B, “Under | more...