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Articles Tagged With: FHA Appraisals

July 14, 2011

FHA Loans, Gift Funds and Inducements to Purchase

By Joe Wallace

When a borrower applies for an FHA home loan, a down payment is required for all transactions. Unlike VA home loans, FHA mortgages do not have a zero-money-down option. Some buyers may struggle to come up with a down payment on the FHA mortgage, which is why the rules allow borrowers to accept funds from outside sources to help pay for up-front expenses like down payments and closing costs as permitted by FHA regulations. But the source of that income determines whether the money is considered a bona fide gift, or if it is considered an “inducement to purchase” which affects the amount of the FHA mortgage loan. Gift funds that come from anyone with “an interest in the sale of the property” can be considered inducements to purchase, and | more...

 

July 14, 2011

FHA Loan Debt-To-Income Ratios: What’s Not Counted As ‘Debt’

By Joe Wallace

Getting approved for an FHA home loan means submitting a lot of personal information to the lender which is used to calculate a potential borrower’s ability to repay the loan. Your lender will ask for information on your current debts, credit lines, loans and other details. All of that information is compiled and compared to the amount of money the borrower gets from income sources the lender can verify. Once those details form a complete financial picture, the lender can make an educated decision on whether or not to approve an FHA home loan. The FHA allows 29% of your total monthly income to be used for housing costs and 41% towards housing expenses and other long-term debt. Getting that “debt picture” can be tricky–some income sources are not considered | more...

 

July 12, 2011

FHA Loan Rules For Co-Signers, Co-Borrowers

By Joe Wallace

When a borrower applies for an FHA insured mortgage, he or she has the option of bringing a co-signer or co-borrower to the deal. It may be easy to assume the two terms are interchangeable, but they aren’t. Co-signers and co-borrowers have different rights and responsibilities under FHA regulations and it’s important to know which is which–especially if you’re the co-signer or co-borrower. The major difference between the two is that a co-borrower “takes title to the property”, meaning that there is shared ownership between co-borrowers. Co-signers sign the legal paperwork and are obligated to pay on the mortgage. Regardless of what financial arrangements have been made privately between the co-borrowers, on paper co-borrowers share responsibility for the mortgage payment. Co-borrowers must qualify for the VA loan together. Compare those | more...

 

July 12, 2011

Fidelity National Financial to Pay 4.5 Million in RESPA Kickback Settlement

By Joe Wallace

FHA borrowers come to the bargaining table with a set of consumer protections on their side in the form of the Real Estate Settlement Procedures Act, or RESPA for short. One of those protections is a policy that lenders may not get any financial compensation for referring business to third parties such as home warranties, insurance, etc. This rule prevents a conflict of interest in the real estate industry; RESPA laws are designed to keep buyers from being steered towards goods and services based on hidden relationships between lenders and third parties. HUD recently issued a press release announcing a settlement involving Fidelity National Financial, which was found to have engaged in illegal kickbacks and referral payments. The press release says Fidelity National Financial, “engaged in a widespread and years-long | more...

 

July 7, 2011

FHA Loans: What The Lender Looks For In Your Credit Report

By Joe Wallace

When a borrower fills out an FHA loan application, there is a requirement to submit a variety of information including proof of income, residency information, and financial details including all currently open lines of credit. The lender will verify all this information, including credit history. The lender must order credit reports from the three major agencies–Equifax, TransUnion, and Experian. These reports cannot be furnished by the borrower, they must come directly from the credit reporting agencies and must contain no erasures or alterations to the physical report itself. Corrections or deletions of any erroneous information must be made by the borrower through the credit reporting company’s official channels. When the lender gets your credit reports, he or she is looking for a standard set of information as spelled out in | more...

 

July 6, 2011

FHA Loan Residency Requirements

By Joe Wallace

One of the unique features of FHA home loans is the occupancy or residency requirement. According to FHA rules, borrowers must certify that the home being purchased with an FHA insured mortgage must be the primary or principal residence. How does the FHA define “principal residence”? According to the FHA official site, “A principal residence is a property that will be occupied by the borrower for the majority of the calendar year.” This means that summer homes, vacation properties, time shares and similar property types are ineligible for FHA new purchase home loans. The part-time nature of these homes excludes them from the FHA mortgage loan program. This issue is easy enough to understand for a single borrower, but what do the rules say when more than one FHA loan | more...

 

July 5, 2011

FHA Streamline Loan Changes

By Joe Wallace

The FHA Streamline loan program is a refinancing option for FHA borrowers which in most cases allows a no-credit-check refinancing loan. Changes to the program has modified the terms and conditions of FHA streamline loans, and FHA borrowers who looked into the program in the past should know about the updates in order to make a properly informed decision on when to apply for streamline refinancing. The FHA breaks down the modified streamline refinancing loan rules into two different categories. The first is for cases assigned on or after 4/18/2011. the second is for cases between 11/17/2009 and 04/17/2011. The most important details for the new streamline FHA refinancing loan rules affects both categories in the same way. For example, the FHA requires streamline loans the result in a “net | more...

 

July 1, 2011

HUD Announces New Disclosure Notice Requirements For Military Borrowers

By Joe Wallace

There are many situations which might make an FHA insured loan attractive to a military borrower who chooses not to use or cannot currently use their VA home loan benefit. Some military members purchased a home with an FHA loan before joining the military; others may choose FHA loan options based on personal preference or because they cannot use VA loan eligibility at the time of purchase. No matter what the reasons for choosing an FHA home loan, conventional mortgage, or VA insured loan, service members have some extra protection in many cases from foreclosure proceedings thanks to the Servicemembers Civil Relief Act (SCRA). Military members on active duty in wartime can get mortgage help, lower interest rates, and foreclosure protection as described in the act by notifying creditors in | more...

 

June 29, 2011

FHA Condo Loan Rules

By Joe Wallace

In previous blog posts, we’ve discussed the different types of FHA loans available and the various types of properties that can be purchased with an FHA insured home loan. Those properties include typical suburban houses, manufactured homes, multi-family units and condominiums. FHA condominium loans are more complex than other loans because the FHA has requirements when it comes to these loans. Borrowers can’t purchase just any condominium unit–it has to be on the FHA’s list of approved condominium projects in order to be considered for an FHA mortgage. That’s one reason why the FHA publishes a searchable list of approved condo projects on its website at https://entp.hud.gov/idapp/html/condlook.cfm. What does it take for a condominium project to be approved by the FHA so a borrower can apply for a loan to | more...