Articles Tagged With: FHA Home Loan

December 29, 2015

Mortgage Rate Trends: Holiday Calm

Mortgage loan rates are being reported in “holiday mode” at present, so while there was some very minor adjustments for the better in rates, we’re not likely to see much in the way of dramatic movement this week barring some form of breaking news that causes a significant investor reaction. As we move from one short week to another before the new year, there is lighter activity in the financial sector, things slow down, and investor behavior tends to reflect this winding-down time, so it’s no surprise that the word “float” is being used a lot when it comes to advising borrowers on getting a mortgage rate lock or not this week. Many industry pros feel floating carries a smaller degree of risk than it did previously due to the | more...

December 24, 2015

FHA Appraisal Standards: “Ordinary” Home Purchases Versus Fixer-Uppers

By Joe Wallace

One good question that comes our way in the comments section from time to time involves the difference between an ordinary new home purchase loan or FHA mortgage and the purchase of a fixer-upper with an FHA rehab loan. If appraisal standards for FHA loans include minimum property requirements, how can a fixer-upper be purchased with an FHA mortgage? After all, the nature of a fixer-upper loan is that you take a property that is in need of rehab or repairs and bring it up to standards. How can a fixer upper pass an FHA appraisal? Fortunately, this issue is addressed in HUD 4000.1, which includes the following: “As the on-site representative for the Mortgagee, the Appraiser provides preliminary verification that a Property meets the Property Acceptability Criteria, which includes | more...

December 23, 2015

HUD 4000.1 On FHA Refinance Loans

By Joe Wallace

When the new FHA single family home loan rulebook , HUD 4000.1, was released, it contained updates, revisions, restatements, and clarifications of FHA home loan policy. We’ve been examining critical areas of HUD 4000.1 and discussing them here. One of those critical areas involves the FHA loan rules for refinance loans. What does HUD 4000.1 say about refinancing in general? Let’s begin with how the FHA now defines refinance loan transactions: “A Refinance Transaction is used to pay off the existing debt or to withdraw equity from the Property with the proceeds of a new Mortgage for a Borrower with legal title to the subject Property.” Then there are the types of refinance loan transactions as described in HUD 4000.1, starting with cash-out loans: “(1) Cash-Out A Cash-Out Refinance is | more...

December 21, 2015

FHA Loans, First Time Home Buyers, and Job History

By Joe Wallace

We get plenty of questions about FHA home loan rules about income, employment, and issues related to being a first time home buyer. Here’s one that came in recently: “I purchased a condo in February 2012, and it was sold three years later,due to financial hardship. I started a new job November 30, 2015 in the same profession as my previous employment history as a customer service representative. Do I qualify as a first time homebuyer to apply for a FHA loan? Would I be required to be employed for at least six months on my new job?” FHA loan rules focus on the borrower’s overall employment history. Here’s what’s written in HUD 4000.1: “For all Employment related Income, the Mortgagee must verify the Borrowers most recent two years of | more...

December 17, 2015

Mortgage Rate Trends: Fed Day, Interest Rate Hike

By Joe Wallace

We have paid more attention to mortgage rate trends this week due to a major economic event scheduled for Wednesday that has big potential to affect mortgage loan rates both in the short term and over the long term. The Fed was scheduled to meet on Wednesday to make an announcement about the possibility of along-discussed December interest rate hike. And Wednesday was the day the Fed finally announced the increase is actually happening. It’s something they have been considering, reconsidering, and delaying for years. But how does this affect the average home loan applicant? In the past, mortgage loan rates have been adversely affected by talk of a Fed rate increase–the rates would jump in the short term based on investor reaction to news of a possible hike, indicators | more...

Can I buy a manufactured home with an FHA loan?

December 16, 2015

FHA Forward Loan Limits For 2016

By Joe Wallace

Recently we wrote about a press release issued by the FHA and HUD announcing FHA loan guaranty limits for the coming new year. The FHA has published two sets of loan limits mortgagee letters–one for Home Equity Conversion Mortgages (FHA HECM loans) and the other for FHA single-family “forward loans”. We covered the FHA HECM loan guaranty limits in a previous blog post; now we turn our attention to the specifics of the FHA forward mortgage loan guaranty limits as published in Mortgagee Letter (ML) 2015-30, which begins by explaining how FHA loan limits are set. According to that mortgagee letter, “The Federal Housing Administration (FHA) calculates forward mortgage limits based on the median house prices in accordance with the National Housing Act. FHAs Single Family forward mortgage limits are | more...

December 11, 2015

Mortgage Rate Trends: Higher Ahead Of Retail Sales Report, Then Lower On Friday

By Joe Wallace

Thursday saw mortgage loan interest rates move higher ahead of this week’s much-anticipated retail sales report. On Thursday we saw 30-year fixed rate conventional mortgage loans move higher (4.0% best execution depending on the lender), though borrowers may notice the increase in closing costs instead of an actual higher number from the day before. The FHA mortgage loan rates stayed (best execution) in the 3.75% comfort zone, but those who shop around for a lender will notice more variation in FHA mortgage loan rates than with conventional equivalents. And then there was Friday–a day where the Retail Sales report could have been a spoiler for rates depending on the report and investor reaction to it. But at the end of the day, rates moved lower, putting 30-year fixed rate conventional | more...

December 11, 2015

FHA Announces New Loan Limits For 2016

By Joe Wallace

An FHA press release announces 2016 FHA mortgage loan guaranty limits for mortgage loans with FHA loan case numbers assigned on or after January 1, 2016. Housing market changes in 2015 brought increases in the maximum loan guaranty limit in many counties–188 areas will see new, higher limits according to the press release. According to the FHA official site, “Each year, FHA recalculates its loan limits based on 115 % of the median house price in the area. For counties, or equivalent, located in Metropolitan Statistical Areas (MSAs) the limit for all areas in the MSA is calculated based on the highest cost county.” The press release says there has been no alteration to the FHA national loan limit ceiling which, according to the press release, “remains at $625,500”. The | more...

December 10, 2015

FHA Appraisals and Air Conditioning Units

By Joe Wallace

A reader got in touch with us recently to ask whether a home with window-mounted air conditioning units could pass an FHA appraisal. Unfortunately the answer to this question isn’t as simple as a yes or no–there are several factors involved that may determine how an FHA appraiser views such units. The first and most obvious would be the condition of the units themselves. FHA appraisal rules require all mechanical systems in the home to be in good working order or be brought into compliance with that requirement through repair or replacement. The appraiser’s job would be to determine whether or not the general state of the window units–where permitted–is acceptable. But there are a few other unanswered questions–do these window units act as a replacement for a faulty or | more...

December 8, 2015

FHA Mortgage Loans and Home Inspections

By Joe Wallace

When you buy a home with an FHA mortgage, there is a process known as a appraisal that must happen prior to loan approval. An FHA appraisal involves a professional who reviews the property to insure it meets FHA minimum standards for safety, economic viability, and livability. Some mistake the FHA appraisal process for a home inspection, but the FHA and HUD are quick to point out that the appraisal is NOT a complete, top-to-bottom review of the home. We get comments and questions about this process in our comments section, and many of them have a familiar theme. Consider this recent reader comment: “…it boggles my mind how I could have bought my home 5 short months ago with an FHA loan and found out that it was infested | more...