Articles Tagged With: FHA Home Loan

May 18, 2016

Mortgage Rate Trends: Higher Ahead of Fed Minutes

Mortgage rates took a turn higher on Tuesday, with some market watchers pointing out that investor behavior ahead of the scheduled release of Fed meeting minutes on Wednesday afternoon could be responsible for some of that upward pressure on mortgage rates. 30-year fixed rate conventional mortgage loans moved out of their previous range and into a single best-execution 3.625%. This best execution rate is still low compared to past numbers but the elimination of the previous range means conventional mortgages are a bit farther away than their FHA counter parts. Previously there was some on-paper overlap between conventional and FHA rates, though FHA mortgage loan rates tend to vary more among participating lenders. FHA mortgage loans are still in a best execution range between 3.25% and 3.5%. It may take | more...

May 16, 2016

FHA Loan Occupancy, Primary Residence Rules

By Bruce Reichstein

FHA single family home loans permit a qualified borrower to choose from many different types of property to buy with an FHA mortgage. You can choose a typical suburban home, a townhouse, condo, or a manufactured home. Other options include condos, modular homes, and mixed-used property that meets FHA loan requirements. But one thing is required no matter what kind of eligible property you decide to purchase with an FHA mortgage; borrowers must meet FHA loan occupancy rules as a condition of loan approval. What does this mean? HUD 4000.1, page 135 has the FHA loan rules for occupancy, stating that all FHA loans require the borrower to take possession of the property as the principal residence within a reasonable time once the loan has closed. According to HUD 4000.1: | more...

May 13, 2016

FHA Loan Questions: Non-Borrowing Spouse Debt

By Joe Wallace

FHA loan rules for calculating a borrower’s debt to income ratio are found in HUD 4000.1. There’s an issue some borrowers face when applying for an FHA mortgage that involves whether or not a non-borrowing spouse’s financial data needs to be included in the debt ratio calculation. This issue affects borrowers in states that have community property laws. Such laws govern how a legally married couple’s debts and other financial affairs are viewed in the context of the legal relationship. The debts and financial obligations incurred by legally married couples in these states are often shared regardless of who actually takes out the loan, applies for the credit card, etc. So in these states, certain extra considerations are required of the lender in the home loan application process. If you | more...

May 12, 2016

FHA Loan Rules On Down Payment Assistance, Gift Funds

By Joe Wallace

We’ve gotten several questions recently about FHA loan rules for down payment assistance programs and related topics. While we’ve addressed issues like this before, it never hurts to revisit topics like these, especially since the FHA transitioned from its previous single family home loan rule books into the single, comprehensive HUD 4000.1. In the past, certain types of down payment assistance grant programs such as NewSong, Grant America, and Nehemiah operated by providing what was known as “seller provided down payment assistance”. In 2008, President Bush signed an act that prohibits such assistance, so all seller-provided down payment funds were no longer possible. But there are state and local programs that do provide some type of down payment assistance. If these programs meet FHA guidelines and requirements, a borrower may | more...

May 12, 2016

FHA Appraisals and Roof Issues: A Reader Question

By Joe Wallace

A reader got in touch with us recently to ask about FHA loan rules for a home in need of certain types of repair. “If the home needs a new roof, will FHA allow a clause or let money sit in escrow for roof repairs after closing?” While the question is too general to give a specific yes or no answer to, there is at least one option that may be possible. Much depends on what the FHA appraiser recommends for that property. Does the roof need to be replaced completely? Or are there simple repairs required? Has the appraisal happened yet, or is the borrower aware of a situation with the roof that could interfere with loan approval unless repaired or corrected? An FHA appraiser will recommend corrections in | more...

May 9, 2016

Mortgage Rate Trends: Moving Lower After Jobs Report

By Joe Wallace

Friday the much-anticipated Employment Situation Report had data that wasn’t as favorable as expected. That helped rates further recover some losses seen in late April, resulting in some market watchers to declare Friday’s gains as the “lowest in three years” (best execution) for some financial institutions. On Friday, 30-year fixed rate conventional mortgages were, best execution, in 3.625% territory. That’s down from a late-April range with 3.75% at the upper best execution end. FHA mortgage rates remain in a range between 3.25% and 3.5%. FHA rates tend to vary more among participating lenders, so it is a very good idea to shop around for the best rates. As always, best execution rates are not available to all borrowers or from all lenders. Your access to rates like these depends greatly | more...

May 5, 2016

FHA Loans and FICO Scores: Fact and Fiction

By Joe Wallace

Some potential FHA borrowers have questions about FHA loan credit score requirements. It’s easy to hear part of story when it comes to other people qualifying for an FHA mortgage and assume you’ve gotten all the facts, but the reality is that FHA loan rules and credit score requirements aren’t the whole picture. Lender standards also have a say in loan approval. That is why FHA loan rules, which specify a FICO score starting at 580 (for maximum financing), don’t have the final say. Lender standards also apply, and those standards (provided they are applied in accordance with federal law) will also factor into the application process. An FHA loan fact: FICO scores below 500 are not permitted. An FHA loan fiction: Anyone with a FICO score in the mid | more...

May 4, 2016

Mortgage Rate Trends: Back to Previous Lows

By Joe Wallace

Since our last look at mortgage loan interest rates (which were moving higher) we’ve seen stock market woes affect mortgage rates. As plenty of professionals will tell you, stocks don’t have a specific tie with mortgage rates, but investor reaction to woes of the market can and often do affect mortgage loan interest rates. So while you won’t see a reciprocal effect with stocks (better or worse stock performance directly changing mortgage loan interest rates) you may notices that under the right circumstances, the kind of behavior happening now. And that behavior is essentially, based on our sources, that stock market troubles this week are helping mortgage rates. 30-year fixed rate conventional mortgages have slid back down to 3.625% best execution, down from the range between 3.625% and 3.75%. FHA | more...

May 3, 2016

FHA Loan Rules: Cash to Close

By Joe Wallace

One of the most common questions we are asked in the comments section involves the nature of a borrower’s required minimum investment-the down payment-for an FHA mortgage. Some potential borrowers want to know if they can finance the down payment, others want to know if other closing costs might be counted as part of the down payment. In both cases the answer is no. Closing costs are separate from the borrower’s required 3.5% minimum down payment according to HUD 4000.1. Furthermore, the down payment must be paid in cash at or before closing time and cannot be financed into the loan amount. The money needed for a borrower’s down payment and certain closing costs are regulated by FHA guidelines. For example, a borrower can’t come up with a down payment | more...

May 2, 2016

Budgeting and Planning For Your FHA Loan

By Joe Wallace

If you are planning to apply for an FHA loan soon and are still in the planning stages of that loan, there are some expenses you can anticipate and save up for. Some borrowers may be interested in financing some of the costs associated with a new loan, but paying them up front can help save money over time. Those who choose to pay these costs up front are often looking at their mortgage loan over the long term. Those who choose to finance certain expenses where permitted may be trying to save money up front. Whichever option you choose, it pays to be an informed borrower-even if you know in advance you want to finance certain expenses. FHA loans and refinance loans have different rules for what expenses can | more...