Articles Tagged With: FHA Loan Application

June 25, 2013

FHA Loan Answers: All About Seller Concessions

Seller concessions are a commonly asked-about topic related to FHA home loans. FHA loan rules permit a seller (or a “third party”) to contribute up to six percent of the sales price or appraised value of the property toward closing costs, discount points or “other financing concessions” according to the FHA official site. The six percent limit would be the lesser of the two amounts–the sale price or appraised value. What specifically can the seller or third party contribute? According to FHA loan rules spelled out in Chapter Two of HUD 4155.1, that six percent limit may include: third party payment for permanent and temporary interest rate buydowns, and other payment supplements payments of mortgage interest for fixed rate mortgages mortgage payment protection insurance, and payment of the upfront mortgage | more...

June 12, 2013

FHA Loan Reader Questions: Appraisals, Moldy Bathrooms, and Dirt Floor Basements

By Joe Wallace

A reader asks, “Can I get an FHA loan if the home has a dirt floor basement and mold in the bathroom?” There are two important things FHA loan applicants should know about the FHA appraisal process. One is that the FHA does not have a complete, exhaustive list of every type of issue a home might have that could disqualify it from FHA loan approval. Second, the FHA requires homes be in compliance with state and local building code. Any situation that is not code compliant for the state or local authority would not pass for the FHA, either. In such cases the FHA appraiser might require corrections, repairs, or other modifications as a condition of FHA loan approval. In other cases the problems may be so bad that | more...

June 11, 2013

HUD, Bank of American Settle Home Loan Refinance Discrimination Case

By Joe Wallace

The FHA/HUD official site has issued a press release announcing the settlement of a housing discrimination case involving Bank of America, “settling allegations that the Charlotte, NC-based lender and Fannie Mae violated the Fair Housing Act by denying a borrower’s application to modify her mortgage loan because she did not provide sufficient information about the nature of her disability.” We report on such cases here as they happen as a reminder to borrowers that they are often the only line of defense against violations of the Fair Housing Act. Without reporting such discrimination cases, it’s possible they may never be prosecuted or settled. In this particular instance, HUD officials make it quite clear what the rules are. “People with disabilities should not have to answer unnecessary questions about the nature | more...

June 5, 2013

FHA Loan Answers: First Time Homebuyers

By Joe Wallace

A reader asks, “I have a Chapter 7 bankruptcy a yr ago w/a score 589 and as a veteran honorable recieving SS benefit income of $735.00/month, and together with my wife, employed 5/yrs with an income is $1,920.00 a month, with a score 580. We have been renting for 5yrs without missing or late payments with the same landlord in Fla. Can we qualify as a first time home buyer?” There are two basic issues related to this reader question. The reader asks if there’s a chance to qualify “as a first time home buyer”. The FHA does not, contrary to popular belief, require applicants to be first time home buyers in order to get an FHA home loan. By the same logic, there is no benefit or preference given | more...

June 3, 2013

FHA Credit Score Rules

By Joe Wallace

We’ve gotten a lot of reader questions lately about FHA loan standards for credit, FICO scores and more. Many readers want to know what the FHA FICO score requirements are and whether their credit reports are good enough to qualify for an FHA mortgage. There are two important things to understand about FHA loan credit requirements. The FHA loan rules spell out the minimum FICO scores required by the FHA; those minimums are found in HUD 4155.1 Chapter Four, Section A. According to the FHA, “The table below describes the relationship between the borrower’s minimum credit score and the maximum loan-to-value (LTV) ratio for which he/she is eligible.” The FHA minimum for maximum financing is listed in the table above at 580. But many borrowers don’t understand that the FHA | more...

May 23, 2013

FHA Announces Assistance For Homeowners in Oklahoma

By Joe Wallace

The FHA and HUD have announced disaster relief for victims of the recent tornado in Oklahoma. According to HUDNo.13-078, “HUD will speed federal disaster assistance to the State of Oklahoma in addition to resources being provided by Federal Emergency Management Agency (FEMA) and other federal partners. HUD will provide support to homeowners and low-income renters forced from their homes due to tornadoes and severe storms.” U.S. Housing and Urban Development Secretary Shaun Donovan has also reiterated current Federal Housing Administration policy, “that mortgage lenders should release insurance payments to homeowners rather than applying these funds toward outstanding mortgage debt” according to the press release. On Tuesday May 21, 2013, the President made a federal disaster declaration for Oklahoma counties including Cleveland, Lincoln, McClain, Oklahoma and Pottawatomi. A federal declaration allows | more...

May 10, 2013

Distressed FHA Mortgages Up For Auction In June

By Joe Wallace

A press release issued by the FHA and HUD announces an auction of delinquent FHA mortgage loans in June of 2013. According to HUDNo.13-066, the move is intended as a form of relief in distressed areas and as a part of, “a broader effort to address the housing market’s shadow inventory and to target relief to areas experiencing high foreclosure activity” according to the release. The press release also adds, “This summer, HUD will sell approximately 20,000 distressed loans through its expanded Distressed Asset Stabilization Program (DASP) to increase recoveries to FHA’s Mutual Mortgage Insurance (MMI) Fund from non-performing FHA-insured loans, while contributing to stabilization and recovery in some of the nation’s communities hit hardest by the housing crisis.” The auction will proceed in a manner similar to past note | more...

May 9, 2013

FHA Loan Reader Questions: HOA Issues

By Joe Wallace

A reader asks, “The town home next door is ruined by fire in July 2012 and not repairing. Trash in carport…I have one wall connecting with that house and my roof is damaged too. I contacted the HOA (I pay $ 100 each month and they should repair roof, clean up territory, etc) but they will DO NOT make any repairs or clean-ups. Even broken sidewalk by broken unit not repaired! I contacted the City and few Code Enforcement officers show up, now is almost year gone but no repairs…I call Code Enforcement again, but they told me, ‘case in progress’ and nothing more. How I can save my house from damage from that broken unit next door – and make Association do the work and repair the roof and | more...

May 7, 2013

FHA Loan Reader Questions: Mortgage Insurance Premiums

By Joe Wallace

A reader asks, “My home has more than 50% equity and I am thinking about refinancing with an FHA loan… will i still need mortgage insuranc3e for the life of the loan.. or can it be cancelled after verification of equity?” FHA loan rules for annual mortgage insurance premiums are changing. Some of the rules have already taken effect, and others go into effect on June 3 2013. FHA Mortgagee Letter 2013-04 says: “For loans with FHA case numbers assigned on or after June 3, 2013, FHA will collect the annual MIP for the maximum duration permitted under statute.” Additionally, “For all mortgages regardless of their amortization terms, any mortgage involving an original principal obligation (excluding financed Up-Front MIP (UFMIP)) less than or equal to 90 percent LTV, the annual | more...

May 3, 2013

FHA Loan Answers: Legal Age For FHA Loans?

By Joe Wallace

A reader asks, “Does one of the co-borrowers have to be enrolled in college, or can one of the applicants be a young employed adult?” FHA loan rules require borrowers to be of legal age acceptable in the laws of your state. If you are old enough to sign a legally binding contract in the eyes of the law, you are old enough to apply for an FHA home loan. That does not guarantee loan approval–the FHA requires the lender to review all borrowers and co-borrowers for creditworthiness, income, employment and credit scores. A borrower who is at the legal age in his or her state, but does not meet credit standards would not be approved for a VA home loan. Borrowers who are in college would still need to | more...