Articles Tagged With: FHA Counseling

March 25, 2013

FHA Loan Reader Questions: 401Ks in the Debt To Income Ratio?

A reader asks, “My sister in law borrows some fund from her 401(k) to refinance her home. She certainly has to back the fund back to her 401(k). The lender says this monthly payment shall be counted when computing her Debt to Income Ratio. According to the FHA, the following list of financial obligations should not be used to calculate the debt to income ratio: Other retirement contributions, such as 401(k) accounts (including repayment of debt secured by these funds). I notice that this blog was written in year 2011. Do these rules still apply at present or have there been any changes so far? It’s true that the FHA has guidelines about how to view a 401K when it comes to calculating the debt-to-income ratio. According to HUD 4155.1: | more...

March 19, 2013

FHA Loan Answers: What Does Your Lender See On Your Credit Report?

By Joe Wallace

When you apply for an FHA guaranteed home loan, you’re required to list a variety of items on your application form including credit data. Your recent debts and other recurring financial obligations are required because the lender must determine your debt-to-income ratio. Some borrowers wonder if leaving items off the application means the lender won’t know about them. But it’s very important to know what the FHA requires and what the lender is responsible for checking when it comes to credit. Do you know what goes into your credit report and what the lender has access to when he or she is processing your application data? Many people don’t. Here’s what the FHA loan rulebook, HUD 4155.1 has to say about credit reporting data and what the lender is required | more...

March 5, 2013

FHA Loans and Refinance Loans: Interest Rates and Fees

By Joe Wallace

What do you, the borrower, need to know about FHA loan fees for new purchase mortgage loans and home loan refinances? It’s a big issue, but there are some basics to understand as you’re planning your next move in the search for a new home or a refinance loan rate. First, the FHA does not set interest rates on refinance loans or mortgage loans. It does require them to be appropriate, reasonable and customary for the market, but the job of negotiating interest rates is one the borrower and lender work on together. The FHA loan rulebook says as much in Chapter One of HUD 4155.1: “Under all currently active FHA single family mortgage insurance programs, the borrower and the lender negotiate the interest rate and any discount points.” Another | more...

March 1, 2013

FHA Loan Reader Questions: First Time Homebuyer Requirement?

By Joe Wallace

A reader asks, “I’m not a first time home buyer, I have a conventional loan for a home that I’m planning to keep as a rental home. Can I qualify for a purchase FHA loan on a primary home?” One of the common misconceptions about FHA home loans is that you MUST be a first-time home buyer in order to qualify for one. This is not true. You may have state or local homebuyer assistance programs in your area that do require the applicant for that program to be a first time buyer, but FHA loans are open to all qualified applicants. The real issue in this reader question has more to do with debt-to-income ratios (DTIs)–will the FHA lender approve a buyer who already owns a home? Single-family new | more...

March 1, 2013

Sound Advice From the FHA on Buying A Home With an FHA Mortgage

By Joe Wallace

If you’re thinking about buying a home with an FHA guaranteed mortgage, now is a very good time to explore your options. Mortgage loan rates may have risen slightly from their “all-time lows” of the past 12 months, rates are still very good, and the housing market recovery makes purchasing a home more attractive than ever. What kind of advice does the FHA official site offer to house hunters thinking about that first FHA home loan application? There first thing to ask is whether you are ready to commit to buying a home now, or if you need to take some additional preparation time. How do you know if you’re ready to commit? According to the FHA, “You can find out by asking yourself some questions: – Do I have | more...

February 28, 2013

FHA Loan Requirements and Your Personal Data

By Joe Wallace

We sometimes get questions about certain practices required to verify and approve the information given on a borrowers FHA home loan application. Borrowers are rightly concerned about protecting their privacy and personal data; what do FHA loan rules say about lenders who ask for account numbers, Social Security information and other private information? FHA loan applicants should know that the FHA does require these types of personal data in order to properly verify and approve the loan. According to FHA loan rules as described in HUD4155.1: “The lender may ask the borrower to sign a general authorization form that gives the lender blanket authority to verify information needed to process the mortgage loan application, such as • past and present employment records • bank accounts and • stock holdings.” FHA | more...

February 22, 2013

FHA Loan Limits For High Cost Counties: FHA Loan Questions

By Joe Wallace

Many borrowers want to know why FHA home loans are available for the same size and type of properties, but in larger or smaller amounts depending on the market. Why aren’t FHA loan amounts standardized? The basic answer to this is that all housing markets are different, and the costs in one market are not necessarily the same for another. A two-bedroom home with a garage in Bangor, Maine might not cost the same to build or finance as a similar home in Cleveland, Ohio. The same goes for properties located on either coast—how much would that two-bedroom home build and sell for in Los Angeles or New York? To address these issues, the FHA has created a table that lists the FHA loan limits for counties where the costs | more...

February 12, 2013

New “Final Rule” On Housing Discrimination Standards

By Joe Wallace

The FHA and HUD have a new yardstick to measure housing discrimination and take appropriate action where needed, according to a recent press release issued by the Department of Housing and Urban Development. According to the press release HUDNo.13-022, HUD is “issuing a final rule to formalize the national standard for determining whether a housing practice violates the Fair Housing Act as the result of discriminatory effect.” “Through the issuance of this Rule,HUD is reaffirming its commitment to enforcing the Fair Housing Act in a consistent and uniform manner,” said HUD Secretary Shaun Donovan. “This will ensure the continued strength of one of the most important tools for exposing and ending housing discrimination.” As the press release states, HUD is “statutorily charged with the authority and responsibility for interpreting and | more...

February 6, 2013

FHA Loans After Foreclosure

By Joe Wallace

We get many reader questions in the comments section asking about how long a borrower must wait in order to be eligible for a new FHA home loan following foreclosure. We’ve answered this question many times quoting the rules and regulations found in the FHA loan rulebook, HUD 4155.1. Now the Federal Housing Commissioner, Carol Galante, has issued some guidance on the subject. While her words are directed toward “stakeholders” and not necessarily consumers in particular, she has an important message that borrowers need to be aware of when considering applying for an FHA loan in the wake of foreclosure proceedings. Galante says, “Recently, we have seen a proliferation of web-based and print advertising regarding the sup- posed ease of obtaining an FHA-insured loan following a foreclosure. Often, this advertising | more...

January 28, 2013

FHA Loan Reader Questions: First Time Home Buyers and Down Payments

By Joe Wallace

A reader asks, “Is it true the first time buyer with an FHA Loan can purchase the home with no money down?” The FHA loan program is similar in some ways to another government-backed loan program–VA loans. VA guaranteed loans are for eligible veterans and feature a no-down payment option unique to that program. FHA home loans, which are also government guaranteed mortgage loans issued by a private lender, do not feature a no downpayment option. According to FHA home loan rules as described in Chapter Two of HUD 4155.1, says the following about down payments on FHA loans in a section titled Maximum Mortgage Amount For A Purchase: “The maximum mortgage amount that FHA will insure on a purchase is calculated by multiplying the appropriate loan-to-value (LTV) factor by | more...