Articles Tagged With: FHA Appraisals

April 15, 2013

FHA Loan Answers: FHA Loan Applications, Separation, and Divorce

A reader asks, “I’m married, the current home is FHA loan under my husbands name only….can i buy a home for 120,000 under FHA to live in? If so, will they count my husbands debts against me getting the loan? We have agreed to live separate, stay married though, do they require legal separation?” This question doesn’t have a one-size-fits-all answer for one very important reason. FHA loan rules go hand-in-hand with state community property laws. What does this mean? If a borrower is divorced, separated, or still legally married in a community property state, each spouse may be liable for all debts incurred during the marriage. In such cases, the FHA lender may be required to include both spouses on the FHA mortgage, run credit checks, etc. on both | more...

April 9, 2013

FHA Loan Reader Questions: Foreclosure Waiting Period

By Joe Wallace

A reader asks, “I’m in the process of obtaining a FHA Loan. I completed my Chapter 13 bankruptcy a year ago after completing five years of payments on time. My credit score is not an issue right now. All of my paperwork is in, or so I thought. My mortgage lender now tells me that I need a letter from the bankruptcy court saying that I’m allowed to get a loan.” “She says that this is a requirement of the underwriters. I think that the underwriter should only be asking for this if I was still in the bankruptcy, not now, when I’ve been cleared by the courts. What can I do?” The answers are not simple in a situation like this, and there are many details we aren’t privy | more...

April 8, 2013

FHA Loan Answers: Applying For A Loan After A Short Sale

By Joe Wallace

Home owners who need to ask about FHA loans after a short sale send us a good many of our most frequently asked questions. What do FHA loan rules say about borrowers trying to apply for a new FHA mortgage after a short sale transaction? According to HUD 4155.1 Chapter Four, “A borrower is not eligible for a new FHA-insured mortgage if he/she pursued a short sale agreement on his/her principal residence simply to • take advantage of declining market conditions, and • purchase a similar or superior property within a reasonable commuting distance at a reduced price as compared to current market value.” But that does NOT mean borrowers cannot apply for an FHA loan after a short sale–if you do not fit into the description above, and were | more...

April 5, 2013

Can A Family Have More Than One FHA Loan?

By Joe Wallace

A reader asks, “Is it true that married couple can only have one FHA loan?” The answer to this question depends on several different factors. What do the FHA loan rules say about having more than one FHA mortgage? If the married couple are obligated together on an FHA loan, there is generally no way to apply for a new FHA loan because of the residency requirement for the home purchased with an FHA mortgage. The rules in this area can be found in HUD 4155.1 Chapter Four, which says “To prevent circumvention of the restrictions on making FHA-insured mortgages to investors, FHA generally will not insure more than one principal residence mortgage for any borrower. FHA will not insure a mortgage if it is determined that the transaction was | more...

April 4, 2013

FHA Loan Rules For Loan Documentation

By Joe Wallace

FHA loans require paperwork. Whether it’s filled out on line, on paper, or using some combination of the two, there are several ares where borrower and lender must work together to complete. You’ll notice when filling out your FHA loan paperwork that there are requirements for certain types of information including credit history, your monthly financial obligations and much more. But did you know there are rules that govern how this information is handled by the lender? For example, one of the most important rules designed for the protection of the borrower applies to how the lender collects your signature and authorization for various steps of the FHA loan or refinance loan application process. The FHA loan rules spelled out in HUD 4155.1 state: “Lenders may not have borrowers sign | more...

April 3, 2013

New FHA Home Equity Conversion Mortgage Rules Take Effect

By Joe Wallace

In January of 2013, the FHA announced pending rule changes to its Home Equity Conversion Mortgage program (FHA HECM for short). Those changes were scheduled to take effect on 1 April 2013 and are now in full effect. In the FHA Mortgagee Letter HUDNo.13-010, the agency announced, “…the consolidation of the Federal Housing Administration (FHA) Home Equity Conversion Mortgage (HECM) Standard and HECM Saver initial mortgage insurance premium (MIP) and maximum principal limit factors for fixed interest rate mortgages.” The announcement states that the HECM Saver program is, as of 1 April 2013, the “only initial MIP option available to mortgagors who seek the predictability of a fixed interest rate mortgage and lower upfront closing costs.” The announcement adds, “Mortgagees shall designate HECM Saver as the initial MIP and use | more...

April 2, 2013

FHA Mortgage Insurance Premium Changes

By Joe Wallace

Effective on 1 April 2013, the FHA changed its mortgage insurance premium rules. We’ve discussed this at length in other blog posts, but now that the date has come and gone for the changes to take effect, it seems like a good time to review those changes. According to FHA mortgagee letter 2013-04, ““FHA will increase its annual mortgage insurance premium (MIP) for most new mortgages by 10 basis points or by 0.10 percent.” FHA MIP for Jumbo Loans is also going up. An FHA Jumbo Loan is basically described as mortgages at $625,500 or more. The increase on these loans is “5 basis points or 0.05 percent, to the maximum authorized annual mortgage insurance premium.” These MIP increases exclude “certain streamline refinance transactions.” The FHA describes these changes in | more...

April 1, 2013

FHA Condo Loans: What Defines A Condo?

By Joe Wallace

There are many different types of property you can buy with an FHA mortgage. Some borrowers are interested in suburban homes, others want a condo unit within the city. FHA loans do permit borrowers to buy condominium units with an FHA guaranteed mortgage, but there are additional rules for these purchases. One of the first things a borrower learns about purchasing a condo unit with an FHA mortgage is the rule found in HUD 4155.1 Chapter Four, Section B. It says, “FHA must approve condominium projects before a mortgage on an individual condominium unit can be insured.” Discuss this requirement with your loan officer to learn more about the FHA approval process and how it works in cases where the condo isn’t currently on the “approved” list. The approval issue | more...

March 27, 2013

FHA Loan Answers: How Long Is An FHA Mortgage?

By Joe Wallace

A common question in any home loan situation is, “How long is my mortgage?” This depends greatly on the type of loan you apply for, the term you agree upon, and how much you pay each month over the lifetime of the loan. In general, FHA mortgages are either 15-year or 30-year loans. The maximum amount of time you can be legally obligated to the original new purchase FHA home loan is 30 years. According to the FHA official site, “The maximum mortgage term may not exceed 30 years from the date that amortization begins. In the case of adjustable rate mortgages (ARMs), the term must be for 30 years. FHA does not require that loan terms be in five year multiples.” Some types of refinancing (certain FHA Streamline Refinances | more...

March 26, 2013

FHA Loan Reader Questions: Loan Applications

By Joe Wallace

A reader asks, “Are all FHA loans , down payments, and everything regarding my future home have to be dealt with an authorized lender or can I deal with FHA directly? If this is the case, where do I have to send all paperwork?” The answer to this question is fairly simple–all FHA loans and FHA refinance loans are handled via a participating lender. Borrowers must apply via the lender, who processes the paperwork and submits it to the FHA where appropriate. The FHA single-family mortgage loan program does not feature a “direct application” process where the borrower submits loan paperwork to the FHA. This is part of a common misconception about the FHA loan program. The FHA does not lend money directly to borrowers, set or maintain interest rates, | more...