Articles Tagged With: FHA Home Loan

June 24, 2016

FHA Loan Questions: Co-Borrowers

A reader asks, “My husband is a co burrower on his mothers mortgage loan and he has been asking her to remove his name from it but she hasnt. The mortgage has affected his credit and has made it hard to get a home of our own. Can his name be removed from the mortgage or is this something we need a lawyer for?” Before answering this question, let’s examine how the FHA defines the role of a co-borrower. Page 128 of HUD 4000.1 states: “To be eligible, all occupying and non-occupying Borrowers and co-Borrowers must take title to the Property in their own name or a Living Trust at settlement, be obligated on the Note or credit instrument, and sign all security instruments. In community property states, the Borrowers | more...

Can I buy a manufactured home with an FHA loan?

June 22, 2016

Are You Ready For An FHA Mortgage?

By Joe Wallace

A recent CNN Money article reveals that more than 10 million Americans spend half their income on rent. It’s a figure (based on a 2014 study at Harvard) that is surprising to some, and motivating for others. Are you considering an FHA mortgage as an alternative to high rents? FHA home loans have features that can be very helpful to those in the market for a new home. Consider the down payment requirement for an FHA mortgage compared to many conventional loans and it’s easy to see that the FHA’s 3.5% down payment requirement compared to between 10% and 20% down for conventional mortgages depending on the lender and the borrower’s financial qualifications. The lower down payment is one factor; another is the borrower’s ability to refinance an FHA mortgage | more...

June 22, 2016

FHA Loan Questions: Restrictions On Resale

By Joe Wallace

One type of frequently asked question that sometimes pops up involves whether or not FHA mortgage loans have any restrictions on the resale of a home. While FHA loan rules require a borrower to be free to sell the property whenever they wish, there are certain time restrictions on the resale of a home when it comes to purchasing a “flipped” house with an FHA mortgage. Specifically, HUD 4000.1 has a section dedicated to this practice, and addresses it accordingly. According to Page 140 of HUD 4000.1, “flipping” is defined as follows: “Property Flipping is indicative of a practice whereby recently acquired Property is resold for a considerable profit with an artificially inflated value, often abetted by a Mortgagees collusion with an Appraiser.” This practice is restricted when it comes | more...

June 21, 2016

More On FHA Adjustable Rate Mortgages

By Joe Wallace

In a previous blog post we discussed FHA adjustable rate mortgage loans and looked at some aspects of how these loans work. FHA adjustable rate mortgages, also known as ARM loans or FHA ARM loans, feature an introductory rate that the borrower and lender will negotiate. This rate will expire at some point and the new rate will be calculated. The interest rate adjustments over the lifetime of the loan are regulated by an FHA requirement that includes a cap on the amount and severity of the rate changes. As we discussed in the last blog post, there are four components to an ARM loan you should know, which include the following: 1. index 2. margin 3. interest rate cap structure 4. initial interest rate period (also known as a | more...

June 14, 2016

Mortgage Loan Interest Rate Trends: More Gains

By Joe Wallace

At the time of this writing, the end of the market day (Tuesday June 14) hasn’t happened yet. But the news about mortgage loan interest rates–even without the most current end-of-day interest rate data–is definitely encouraging for anyone considering a home loan at the present. Rates have fallen to lows not seen in quite some time. 30-year fixed rate mortgage loan interest rates (best execution) were reported at the end of the business day on Monday at a range between 3.625% at the upper end of the range and an FHA loan-challenging 3.5% at the lower end of the range. Some are saying these are the lowest we’ve seen rates in several years, while others are using the phrase “close to all-time lows” to describe what is being seen, best | more...

June 10, 2016

Mortgage Rate Trends: Moving Even Lower

By Joe Wallace

Mortgage rates dropped lower on Thursday, putting them at levels we haven’t seen in quite some time. Some market watchers are hailing this move as a “three year low”, but whatever you call it, conditions are right to but conventional mortgage loan best execution rates (depending on the lender) in line with the upper end of the FHA mortgage loan best execution range. That’s on paper, mind you, and your results will vary depending on a variety of factors. But that on paper comparison between what’s offered by FHA lenders (best execution) and what’s offered by a small number of competitive conventional lenders is not a common thing, especially when those numbers start to look similar. 30-year fixed rate conventional mortgage rates are, by many reports, more commonly found at | more...

June 2, 2016

HUD Announces Housing Counseling Committee

By Joe Wallace

In many of our blog posts, we encourage borrowers to contact the FHA/HUD directly to seek a referral to a local, HUD-approved housing counselor. Pre-purchase counseling can be a very important part of the home loan application process, especially for borrowers who are new to the mortgage loan process. In some cases, as with FHA reverse mortgages/HECM loans, counseling is required as a condition of loan approval. Borrowers can contact the FHA/HUD directly to request housing counseling by calling 1-800 CALL FHA. And now, thanks to action by HUD in compliance with the Dodd-Frank Act of 2010, a new committee is looking into ways to expand and improve housing counseling. According to a press release at the HUD official site, on Wednesday June 1, 2016, “this advisory panel will help | more...

May 27, 2016

FHA Appraisal Rules For Wells: A Reader Question

By Joe Wallace

A reader got in touch with us recently to take exception to a blog post we wrote in 2011 about FHA loan appraisal rules for sewer and septic systems. In that post, we state, “Sewer systems are not identical, but as long as the system is functioning properly and lives up to local codes, the FHA does not disqualify the home simply because a sewage or septic system isn’t the same as a typical suburban system in a metropolitan area.” The reader replies, “No, that is not true. FHA has own guidelines, they do not go by the state and local guidelines. We were set to close on a brand new home, we had a well inspection and water test which all complied with local guidelines and 3 days before | more...

May 20, 2016

FHA Appraisal Rules: A Reader Question

By Joe Wallace

A reader got in touch with us recently to ask a question about wells and FHA loan approval. “Is a flow test required on a pre-existing drilled well in order to get financing using FHA? This is in a town where there is no public water and a drilled well is the normal. Well has passed all other test to determine all health safety and has been approved by the FHA appraiser.” FHA loan rules state that “Wells must deliver water flow of five gallons per minute over at least a four-hour period”. Furthermore, “The Mortgagee must ensure that new wells are drilled and are no less than 20 feet deep and cased. Casing should be steel or other casing material that is durable, leak-proof, and acceptable to either the | more...

May 18, 2016

Preparing For Your FHA Loan: Important Questions To Ask

By Joe Wallace

Are you in the planning stages for an FHA loan? Considering your refinance loan options? Regardless of which choice you’re making (new purchase or refinance) there are some important questions to ask yourself when preparing to apply. The first of those is one of the most important. “Am I giving myself enough time to prepare?” Some borrowers need more preparation time than others. If you don’t have 12 months of on-time payments on all financial obligations, for example, you should definitely take the time to make sure you bring that to the bargaining table. Lenders will be looking for that 12 months-or-better reliability to establish your creditworthiness. Some borrowers need more time to save up for certain closing costs and, in the case of new purchase FHA loans, the required | more...