Articles Tagged With: FHA FICO Requirements

March 18, 2015

FHA Mortgage Rate Trends: Large One-Day Drop In Best Execution Rates

On Wednesday mortgage loan rates in general saw a significant drop in the wake of a highly anticipated Fed announcement, which included words some have taken to mean there will be no interest rate increase in the month of April. Some sources are labeling today’s downward move as “the best day of 2015” based on that drop; 30-year fixed rate conventional loan best execution rates are for some extremely well-qualified borrowers coming in at 3.75%, best execution. Borrowers who “floated” into the Fed announcement today were, by all accounts, given a good payoff. That said, those who floated are now being encouraged by many industry professionals to lock, as there is no guarantee that today’s sharp improvement in best execution rates will continue tomorrow or the next day. The lenders | more...

March 18, 2015

FHA Loan Assumptions: A Reader Question

By Joe Wallace

A reader asks, “Myself and my brother bought a house together in 2010, and now my brother and his adult son (nephew) would like to assume the mortgage and remove me of any obligation instead of going through the process/cost of buying/selling. Is this possible with an FHA loan?” A home purchased with an FHA mortgage loan may be assumed by another party under certain conditions. The FHA/HUD official site says the following about FHA loan assumptions: “Assumption of an FHA-insured mortgage is a servicing function where the responsibility of the mortgage is acquired by another person through either Simple or Creditworthiness process. Individuals may assume mortgages originated prior to December 1, 1986, by utilizing the “Simple Assumption” process.” “For those mortgages originated on December 1, 1986 and thereafter, HUD | more...

March 12, 2015

FHA Loan Eligibility Rules: Divorce and Foreclosure

By Joe Wallace

A reader asks, “Foreclosure exception question. Say a couple was looking to purchase a home, but the husband had a foreclosure which occurred under his name. Would they be able to qualify for a NJ mortgage using divorce as the exception to the three year rule, especially when the divorce decree is dated for one specific year but the foreclosed mortgage loan is from two years after the divorce???” “I am very curious as to this because to me it wouldn’t make sense that the divorce circumstance for exception would be an option due to the fact that this person took out a mortgage for a property which he was not living in two years after his divorce took place, and placed it solely in his name? I would think | more...

March 11, 2015

FHA Mortgage Rate Trends: Improving

By Joe Wallace

Last Friday, a strong jobs report put a lot of pressure on mortgage loan rates in general, pushing 30-year fixed rate conventional loan interest rates out of the three percent zone and into 4.0% best execution territory. That’s a large step higher for rates that have managed to hang on to the mid to upper three percent range (best execution) for quite some time. FHA mortgage loan rates, which can be slow to follow the changes in conventional loan rate moves depending on circumstances, also pushed into higher territory, hitting 3.75% for the first time in a long while. This move higher is still better than some rates we’ve seen hit in the last two years but in recent memory this is as close to the 4.0% range as FHA | more...

March 7, 2015

FHA Loan Rules: Employment Verification

By Joe Wallace

When you want to apply for an FHA home loan, the lender will give you forms to complete that include requests for information on your past and current employment. Employment history is an important part of the FHA loan application review process and the lender is required to verify your employment by contacting your place of work. But what do FHA loan rules specifically require? HUD 4155.1 has the guidelines for lenders. Chapter One Section B of HUD 4155.1 instructs your lender: “The lender is required to verify the applicant’s employment history for the previous two years. However, direct verification is not required if all of the following conditions are met: • the current employer confirms a two-year employment history (this may include a pay stub indicating a hiring date) | more...

March 4, 2015

FHA Loan Approval or Rejection: The Notification Rules

By Joe Wallace

When a borrower applies for an FHA home loan for the first time, it’s normal to wonder how long it might take and how the borrower might be contacted when the decision has been made. When it comes to the length of time to process the loan, there is no set answer–it can depend a great deal on the lender’s workload, how easy or difficult it is to track down a borrower’s credit information, etc. But once a decision has been made, FHA loan rules in HUD 4155.1 tell the lender how to proceed. Once the decision has been reached, FHA loan rules state, “The lender is responsible for notifying the borrower of the approval, either in writing or verbally, immediately after receipt of the underwriter’s decision.” That is found | more...

March 3, 2015

Interest Rate Caps On FHA ARM Loans

By Joe Wallace

In our last blog post we began discussing FHA adjustable rate mortgages, also known as ARM loans. We talked about how an FHA ARM loan works: “An ARM has four components: (1) an index, (2) a margin, (3) an interest rate cap structure, and (4) an initial interest rate period. When the initial interest rate period has expired, the new interest rate is calculated by adding a margin to the index. Your lender will disclose the margin at time of loan application (margins may vary from lender to lender, so it’s a good idea to shop around for a low margin).” We also mentioned the adjustable nature of the interest rates on these loans. “As the index figure moves up or down, the FHA official site says a borrower’s interest rate, | more...

February 18, 2015

FHA Loan Facts

By Joe Wallace

There are plenty of myths about FHA home loans–it’s easy to misunderstand parts of this important loan program if you’re new to it, but knowing some basic facts can help you better understand what an FHA home loan has to offer you compared to conventional mortgage loans. Fact: FHA loans are NOT just for first-time home buyers. FHA loans don’t provide any advantage or disadvantage to a loan applicant based on your status as a first-time home buyer or first-time FHA borrower. All qualified borrowers are eligible for the same types of FHA loan programs. Your interest rate and other terms may vary depending on your financial qualifications. Fact: FHA loans have no income limit. Some people assume that FHA home loans are intended for financially disadvantaged borrowers, but this | more...

February 17, 2015

FHA Loan Questions: “Substitute Forms of Credit”?

By Joe Wallace

A reader asks, “My question is what would be a substitute form of credit?” Since this question was asked in response to our blog post, “FHA Loan Credit Report Rules”, it’s probably safe to assume the reader is asking whether the FHA will permit the lender to consider alternative credit or non-traditional forms of credit in cases where the borrower has either no credit history, or a lack of traditional credit. From our original post: “HUD 4155.1 Chapter One has rules and instructions for the lender in these areas. Under “Required Credit Information” we find the following: “A credit report submitted with a loan application must contain all credit information available in the accessed repositories. Additionally, for each borrower responsible for the debt, the report must contain all of the | more...

February 12, 2015

FHA Mortgage Loan Interest Rate Trends: Moving Higher

By Joe Wallace

FHA mortgage rates have been trending higher this week, with pressure on rates bringing 30-year fixed rate conventional mortgages up slightly higher every day in February so far. Bond markets and overseas economic news about the European Central Bank have contributed to those rates moving higher, but all the while, FHA mortgage loan rates have remained in a best-execution comfort zone of 3.25%. But that changed on Tuesday after significant upward pressure that changed conventional rates finally pushed FHA mortgage loan rates higher–now found at the time of this writing in a range between 3.25% and 3.5% for the most qualified FHA loan applicants. Best execution rates are not available to all borrowers or from all lenders. Your FICO scores, loan repayment history and other factors will determine your access | more...