Articles Tagged With: FHA Loan Application

August 21, 2012

What Are My Chances For An FHA Loan? Reader Questions

A reader asks, “I have good credit but my wife had a delinquent student loan. It is now up to date for the past two months. We only have two car payments, never been late. We also have (a) home in another part of the state since my job transferred me to a different city. What are the chances of us getting a loan?” Questions like this are hard to answer for several reasons–one of which is the reader doesn’t provide any credit score information. FHA home loans require the borrower to have a minimum credit score. In general, borrowers should not expect an FHA loan unless their credit score is at least 580 or better, and many lenders won’t approve a loan for borrowers with credit scores lower than | more...

August 21, 2012

FHA Streamline Refinancing: the Net Tangible Benefit Rule

By Joe Wallace

FHA Streamline Refinancing loans have a set of requirements regarding the streamline loan’s benefit to the borrower–requirements that directly affect the borrower’s eligibility for such loans. According to the FHA loan rulebook, there must be a “net tangible benefit” to the borrower as a result of the streamline refinancing loan. The Federal Housing Administration has a specific definition of this term which must be met (with certain exceptions allowed). From HUD 4155.1 Chapter Six, Section C: “The lender must determine that there is a net tangible benefit to the borrower as a result of the streamline refinance transaction, with or without an appraisal. Net tangible benefit is defined as:

August 17, 2012

FHA Loans and Employment Verification

By Joe Wallace

When you apply for an FHA mortgage loan, you’re required to list your employment history so it can be verified before loan approval. For borrowers who have had steady jobs with the same employer for two years or more, this isn’t a great cause for concern. Borrowers who have changed jobs more frequently than that may be worried that their job history might work against them on the FHA loan application. Is this fear grounded in reality? Or does the FHA make provisions for borrowers with recent job changes, a history of seasonal employment or other issues? According to the FHA loan rules found in HUD 4155.1, these issues are circumstantial and must be reviewed on a case-by-case basis to avoid discriminating against legitimate, qualified FHA borrowers who happen to | more...

August 10, 2012

FHA Loans, Delinquencies and Federal Debt

By Joe Wallace

What can make a borrower ineligible for an FHA guaranteed home loan? Many things–a credit score that is too low, a lack of verifiable income or employment, and according to HUD 4155.1 Chapter Four Section A, delinquent federal debts. Instructions to the lender in HUD 4155.1 state, “If, after checking public records, credit information or CAIVRS, a borrower is found to be presently delinquent on any Federal debt or has had a lien (including taxes) placed against his/her property for a debt owed to the Federal government, he/she is not eligible for an FHA mortgage until –the delinquent account is brought current, paid, or otherwise satisfied, or –a satisfactory repayment plan is established between the borrower and the Federal agency owed, which is verified in writing. Tax liens may remain | more...

August 1, 2012

FHA Loan Prequalification: Does It Expire?

By Joe Wallace

A reader asked recently whether pre-qualification for an FHA home loan has an expiration date. The answer to that question depends greatly on the lender’s policies for pre-qualifying, but there’s a related issue that some borrowers may confuse with pre-qualification–interest rate lock-ins. Pre-qualifying is when an FHA loan applicant applies in advance for an FHA loan amount. The lender will tentatively approve an FHA loan amount based on the borrower’s application data and credit worthiness, but the real FHA home loan isn’t finalized until an offer is made, the appraisal has been accomplished and all the other usual procedures are finished. Pre-qualification is a way for the lender to know approximately how much loan he or she can afford and house hunt accordingly. The interest rate lock-in period is different | more...

July 31, 2012

FHA Loan Rules: Owner Occupancy

By Joe Wallace

A reader asks, “When applying for an FHA loan, how long must I live on the property?” Assuming the reader wants to know how long he or she must own the home before it can be sold, borrowers with this question should know there FHA loan rules that do apply to occupancy and how long a seller has owned the property. For example, HUD 4155.1 Chapter Four Section B contains the FHA Requirement for Establishing Owner Occupancy, which states: “At least one borrower must occupy the property and sign the security instrument and the mortgage note in order for the property to be considered owner-occupied. FHA security instruments require a borrower to establish bona fide occupancy in a home as the borrower

July 24, 2012

FHA Appraisal Transfers

By Joe Wallace

In our previous blog post about FHA appraisal portability and transfers, we discussed the fact that FHA appraisals which have not expired can be transferred from one lender to another if the borrower decides to change lenders prior to the FHA loan closing. This transfer is not automatic–the borrower is required to request the transfer, according to the rules issued in FHA Mortgagee Letter 09-29. Those rules also address something known as appraisal shopping, where a lender orders more appraisals, “to assure the highest possible value for the property and/or the least amount of deficiencies and/or repairs are noted and required by the appraiser.” Appraisal shopping is expressly forbidden by FHA loan rules, but there are circumstances where a second appraisal might be warranted. According to the FHA, those situations | more...

July 24, 2012

FHA Loan Reader Question: Appraisal Portability

By Joe Wallace

Are FHA appraisals “portable”? One reader asks, “I applied for an FHA loan through a large company a few months ago. I have decided to switch mortgage companies as the customer service has been really awful and the process has been taking 2-3 months for a closing date.” “Can I use the appraisal from the FHA loan process that I am currently going through with the new mortgage company? It seems as though it would be valid for 120 days but I didn

July 23, 2012

FHA/HUD Assistance For New Jersey Storm Victims

By Joe Wallace

A recent HUD press release, HUDNo.12-117, announced disaster assistance for New Jersey storm victims, including those with FHA guaranteed mortgages. On Thursday, July 19th, President Obama announced a disaster declaration for Atlantic, Cumberland and Salem Counties. According to the press release, “The President

July 19, 2012

A Second Chance For Some FHA Borrowers? HUD Accepting Applications to Purchase Troubled Neighborhoods

By Joe Wallace

The FHA and HUD have issued a press release about the Distressed Asset Stabilization Program, which is described as “an expansion of an FHA disposition program that sells pools of defaulted mortgages headed for foreclosure and provides the opportunity for the purchaser and borrower to avoid a costly foreclosure.” HUDNo.12-116 says “Qualified entities interested in purchasing pools of severely distressed loans formerly insured by the Federal Housing Administration (FHA) can now submit applications for the Distressed Asset Stabilization Program“, stating that around 3,500 loans will be sold in four areas among the communities hardest hit by the foreclosure crisis. Those areas are Chicago, Illinois, Newark, New Jersey, Phoneix, Arizona and Tampa, Florida. This stabilization program is part of the Obama Administration’s efforts to stimulate “public/private partnerships to stabilize neighborhoods and | more...