Articles Tagged With: FHA Home Loan

August 25, 2016

FHA Loan Appraisal Rules: A Reader Question

A reader asks, “I have been told by my realtor and the lender that an appraisal on a house I own will be on record for 180 days. They said that the appraised value will be on record and no other FHA appraisal can be made during this 180 day period. Is there a master list that other lenders and appraisers cross reference during this six month period? My reading of your blog indicates that if another FHA buyer makes an offer on my property. a different appraisal would need to be performed.” HUD 4000.1 does indeed contain language that leads one to believe that a new appraisal may be required. On page 120, we find the following: “The Mortgagee must order a new appraisal for each Mortgage or refinance | more...

August 19, 2016

FHA Loan Rules For Overtime Income

By Joe Wallace

A reader asks, “Can I use my current overtime income if Ive been working at this company 20 months but my previous company I also had overtime which I worked there for 1 year and my previous before that I worked for 4 years with overtime?” FHA loan rules require the loan officer to verify income that will be used toward calculating the borrower’s debt-to-income ratio. Only verifiable income can be used, which means the lender must determine that the income is stable, reliable, and likely to continue. Income from a variety of sources may be considered. Some FHA loan applicants have seasonal jobs, some have part-time employment, some get income from disability benefits, etc. All of these sources can be used provided they meet FHA loan standards. The same | more...

August 18, 2016

FHA Loans and 401K Income

By Joe Wallace

A reader got in touch with us recently in the comments section to ask a question about 401K retirement income as it relates to FHA loan approval. “Does the fact that you have a 401k count as income or does it benefit your chances in any way of getting a home loan?” FHA loan rules in HUD 4000.1 cover a variety of income sources including 401k income. Individual retirement account income from a 401K may be used to qualify a borrower for an FHA mortgage provided the income meets FHA and lender standards. HUD 4000.1 instructs the lender on how to review 401K income, beginning with a definition of it: “Individual Retirement Account (IRA)/401(k) Income refers to income received from an IRA.” With the definition spelled out, the FHA loan | more...

August 17, 2016

FHA Loan Questions: Income Rules

By Joe Wallace

A reader got in touch with us to ask a question about FHA standards for income. “I am on contract and my lender just told me that I might not be qualify for FHA because of my income. Is that one of the requirements for FHA?” FHA loans require the borrower to financially qualify for the loan, which includes the lender making a determination about the borrower’s employment situation. While this reader question is far too general to answer with regards to the reader’s specific circumstances, we can observe the following about FHA home loans based on a reading of HUD 4000.1: The lender is required to verify a borrower’s income to insure it is stable, reliable, and likely to continue. Income that is deemed “verifiable” is allowed to be | more...

August 12, 2016

FHA Loans and Social Security Income

By Joe Wallace

A reader asks, “I don’t understand if I have a 1099 and I have a benefits letter, and the letter that states at the end of the year what I am getting for the following year, why I am being asked or can be asked for something that states I will get social security for 3 years? There is nothing that says social security will give this to me or a name for it.” FHA loan rules governing Social Security income are found in HUD 4000.1, page 195 under “Other Sources Of Effective Income”. The rules require the lender to make a distinction between “effective income” which would continue for at least three years of the new loan, and “compensating factors” in the case where the lender cannot establish that | more...

August 4, 2016

Facts About FHA Adjustable Rate Mortgages

By Joe Wallace

If you are considering your FHA loan options, at some point you’ll likely consider your choices between mortgage loan interest rate options. Qualified borrowers can choose between a fixed-rate FHA mortgage or an adjustable rate loan. Fixed rate loans seem simple and straightforward enough. The borrower applies for a home loan at an interest rate negotiated between borrower and lender. But what about adjustable rate mortgages? These loans, often called ARM or FHA ARM loans, feature an introductory rate, and a higher rate that begins at a specified point in the course of the mortgage. According to the FHA loan rulebook, HUD 4000.1, “The Mortgagee must establish the initial interest rate and the margin. The margin must be constant for the entire term of the Mortgage.” How long does your | more...

August 2, 2016

FHA Home Loan Questions: Mobile Home/Manufactured Home Foundations

By Joe Wallace

We have not one, but two questions in our comments section recently about mobile homes/manufactured homes. Here’s the first: “We had our modular home purged when we ref in 1997. It was required to have tie downs installed when it was refinanced. We are now selling our property and now the lender is requiring that different tie downs need to be done. Is there a clause grandfathered in any tie downs prior to 2001 excludes this update to the old tie downs?” The problem with answering this question is that lender standards, plus state/local building code would definitely apply. It’s not clear what the reader is asking when discussing the “grandfather clause”. Is that in reference to HUD 4000.1 rules governing FHA loans for manufactured homes? Or is that in | more...

July 25, 2016

Mortgage Rate Trends: Pushing Higher

By Joe Wallace

Since our last report, mortgage loan rates have pushed forward; they moved higher on both Thursday and Friday of last week. We have several scheduled economic data releases this week and a Fed meeting that could push rates further depending on investor reaction to them. At the time of this writing, 30-year fixed rate conventional mortgages are in a best-execution range between 3.375% and 3.625% depending on the lender. 3.5% is likely more common according to our sources but your experience may vary depending on a variety of factors. FHA loan rates are still holding in the best execution 3.25% comfort zone, but if upward movement continues we may see FHA rates break out into a range with 3.25% at the bottom end initially. Best execution rates assume ideal conditions; | more...

July 21, 2016

More About FHA Loans For Home With PACE Assessments

By Joe Wallace

Recently we wrote a blog post about FHA plans to allow qualifying homes with PACE assessments to be purchased with FHA mortgages. The FHA announced this recently in order to help promote energy efficiency (PACE stands for Property Assessed Clean Energy and may be assessed in a manner similar to property taxes.) The FHA issued a mortgagee letter explaining how and why a property with a PACE assessment may be eligible for an FHA mortgage. Past issues with PACE include being considered a “first lien” on the property. FHA loan rules explain how new guidelines can permit a home with PACE to be purchased with an FHA mortgage: “Properties which will remain encumbered with a PACE obligation may be eligible for FHA-insured mortgage financing, provided that the mortgagee determines that | more...

July 20, 2016

FHA Loans For Properties With PACE Assessments

By Joe Wallace

The FHA has announced it will insure mortgages on qualifying homes that have PACE assessments. According to a press release on the FHA/HUD official site, the move was initiated to help encourage the use of clean energy. “In order to enable homeowners seeking clean energy technologies in their homes to leverage a range of financing options, the Federal Housing Administration (FHA) today announced guidance that makes clear the circumstances under which it will insure mortgages on properties that include Property Assessed Clean Energy (PACE) assessments. FHA will now approve purchase and refinance mortgage applications in states that treat PACE obligations as special assessments similar to property taxes.” That’s according to the July 19, 2016 press release, which explains that the reason PACE assessments have been troublesome in the past is | more...