Articles Tagged With: FHA Home Loans

February 4, 2015

FHA Loan Rules On Giving Personal Property To The Buyer

Sometimes when a borrower purchases a home, the seller will offer to to throw in some types of personal property as part of the deal. Knowing that the FHA has strict rules on something known as “inducements to purchase”, does the FHA allow or deny sellers to offer personal property to sweeten the real estate deal? An inducement to purchase is when the seller offers to pay certain expenses on behalf of the borrower that exceed six percent of the sales price or appraised value (whichever one is lower). But offering property isn’t the same as paying in the eyes of some–does that mean the property is exempt from inducements to purchase regulations? The answer to this question can be found in HUD 4155.1, Chapter Two, Section A. That part | more...

January 31, 2015

FHA Loan Rules On Appraisals and Required Corrections: A Reader Question

By Joe Wallace

A reader asks, “Is the seller responsible to pay for all repairs before closing?” Assuming that this reader question is in reference to required corrections or alterations to a home listed by the FHA appraiser, much depends on the type of repairs or corrections required. If repairs or corrections are required to fix hazardous conditions, those fixes must happen and a compliance inspection (where required) must occur before the loan can be approved. Let’s see what HUD 4155.1 Chapter Four says about the appraisal process and required corrections: “In the performance of an FHA appraisal, the appraiser must • denote any deficiency in the appropriate section(s) of the appraisal report (site issues in the site section, improvement issues in the improvements section, and so on), and • note those repairs | more...

January 29, 2015

Lower MIP On FHA Loans: A Reader Question

By Joe Wallace

A reader asks, “What’s the lead time on case cancellation requests? With new case number requests?” The reader is asking about FHA loan case number cancellation requests made possible for a limited time to help qualified FHA borrowers take advantage of the new, lower annual Mortgage Insurance Premiums announced earlier this month by the FHA and HUD. We wrote about this in a blog post titled, FHA Mortgage Premium Cuts Begin Today. That article includes the following information: “On Thursday, January 8, 2014, the FHA and HUD issued a press release announcing a cut to the FHA’s required annual mortgage insurance premiums, also known as MIP. According to the press release, “As the nation’s housing market continues to improve, U.S. Housing and Urban Development Secretary Julián Castro today announced the | more...

January 23, 2015

FHA Loan Income Rules For Child Support: A Reader Question

By Joe Wallace

A reader asks, “For FHA loan will child support stop you from getting a loan?” Let’s see what the FHA official site (www.FHA.gov) has to say about this question. On a frequently asked questions page at the official site, we find the following: “Most recurring obligations, including child support and alimony are considered in computing debt-to-income ratios. Debts lasting less than ten months must be counted if the amount of the debt affects the borrower’s ability to make the mortgage payment during the months immediately after loan closing; this is especially true if the borrower will have limited or no cash assets after loan closing. Because of the tax consequences of alimony payments, the lender may choose to treat the monthly alimony obligation as a reduction from the borrower’s gross income | more...

December 26, 2014

FHA Loan Reader Questions: Principal Reduction

By Joe Wallace

A reader asks, “I am owner/occupant of a 4 unit residential apartment Bldg which I built 37 years ago. it was successful until wacancies took over after the crash, I have funded the payments with my cash flow but it is now getting lower and lower and need my 6% reduced to the 3% rates with help i a small principal reduction.” This falls far outside the FHA single-family home loan program. The reader doesn’t indicate in the question whether the original loan was an FHA-guaranteed mortgage or not, but in any case, a borrower who seeks a principal reduction needs to work with the lender to see if this is possible. A refinance loan option may be possible depending on the circumstances and the lender, but again, this is | more...

December 12, 2014

FHA Appraisal Appeals: A Reader Question

By Joe Wallace

A reader asks, “A buyer for my property secured an FHA approval and had a FHA appraisal performed. The appraisal was well below the contract price, so much so that it was below the County’s tax assessed value. Better comps and explanations were provided for the market area, but the appraiser would not amend the appraisal.” “The buyer went to another lender to but was told the previous FHA appraisal was valid for 6 months and a new appraisal could not be requested. Is this true, even if the circumstances were clearly presented?” In some limited cases an FHA appraisal may be appealed, but this would be handled on a case-by-case basis and would be at the FHA’s discretion. FHA loan rules do not permit borrowers to appeal an appraisal | more...

December 11, 2014

FHA Appraisals: A Reader Question

By Joe Wallace

A reader asks, “I had moved out of my home while renovations were done to my property prior to getting an FHA re-fi I had an FHA appraisal done immediately after the repairs were completed.”” “However now the lenders says that because the property was vacant when the appraisal was done it appears that no one lives there and therefore they are not allowed to do a re-fi for this property and to compound the problem I have been told that every lender subsequent to this lender will say the same thing. Is this true?” It’s impossible to speak for all lenders–policies may vary from one financial institution to another. However, one thing to keep in mind is that FHA appraisals do have an expiration date and once that expiration | more...

December 5, 2014

FHA Loan Requirements For Credit Checks, Documentation

By Joe Wallace

FHA loan rules require your loan officer to perform credit and employment checks, examine the source of down payment funds, and verify your income. In order to accomplish this, the FHA requires the lender to get documentation from the source; the borrower cannot provide the lender with credit reports, for example, and must contact your employer directly for verification of your income and work history. The rules governing these procedures are found in HUD 4155.1 Chapter One, Section B. which includes permission for the lender to ask the borrower for “blanket authorization” as described below: “The lender may ask the borrower to sign a general authorization form that gives the lender blanket authority to verify information needed to process the mortgage loan application, such as •past and present employment records | more...

December 1, 2014

FHA Loan Rules For Wells: A Reader Question

By Joe Wallace

A reader asks, “A property has a well under the garage floor which is accessed through a steel covering. Is this acceptable if the Health Dept approves it?” The answer to this question depends greatly on whether the well as described is acceptable under state or local building code. FHA loan minimum property requirements don’t overrule state and local building codes, so compliance with those codes would be required–in the appraisal process, if the appraiser notes a condition that does not comply with either FHA loan rules or state/local building codes, corrections may be required as a consition of loan approval. When it comes to wells, FHA rules printed in HUD 4150.2 state: ” A domestic well must be a minimum of 50 feet from a septic tank, 100 feet | more...

November 6, 2014

FHA Loan Interest Rate Trends

By Joe Wallace

FHA mortgage loan rates are on the rise this week following upward pressure that started late last week after the Fed made an important announcement. The Fed decided to end Quantitative Easing, which is essentially a government stimulus program that invested in markets and helped keep mortgage rates lower thanks to those investments. Last week, when the end of the program was announced, investor reaction to the news put upward pressure on mortgage loan rates in general, kicking off a trend that continued late into the week resulting in four week highs for rates by 3 November. The numbers you’ll see reported below are listed as best execution rates, but suffice it to say that mortgage loan rates across the board have been affected by current conditions. For much of | more...