Articles Tagged With: FHA Loan News

April 27, 2015

FHA Loan Rules For Co-Borrowers: A Reader Question

A reader asks, “In the case of two names on the deed (only one will be living in the home), are both incomes & debts considered for debt to income ratios?. Also is it required the mortgage co. listed on both of their Home owner Insurance?.” There are many issues that can affect the answer to this question. Are the two people married? Related by blood, marriage, or a family-type relationship? These are important issues that can affect how much the FHA is willing to guarantee on the loan and how much down payment is required. Also, state laws may affect how such a transaction is carried out, especially if the people buying the home are legally married. Community property states may have laws that govern how a lender is | more...

April 17, 2015

FHA Home Loans: What Is CAIVRS?

By Joe Wallace

In our last post, we answered a reader question about trouble with an FHA home loan associated with information found in the CAIVRS system. One of the important aspects of that reader question is the definition of what CAIVRS is and how data found in that system could affect an FHA mortgage loan application. The FHA official site has a Frequently Asked Questions section that addresses CAIVRS, which stands for Credit Alert Verification Reporting System. This is a system maintained by the federal government that, as the FHA official site explains, “lists persons who have defaulted or had a loan foreclosed within the last three years on a debt owed to the Federal government or are currently delinquent on a debt owed to the Federal government.” Examples of what the | more...

April 7, 2015

FHA Loan Appraisal Rules: A Reader Question About Basements

By Joe Wallace

A reader asks, “We have signed a contract to sell our home to an FHA buyer. The Realtor said that he sees “no glaring” issues and we have disclosed that we have a seasonally damp basement. Will this be an issue?” The answer to this question may depend on state or local building code, and whether or not the FHA appraiser will note the condition as something that needs to be corrected if possible. HUD 4050.2 spells out some of the unacceptable conditions that could render a home unacceptable for an FHA mortgage loan unless those conditions are deemed repairable. HUD 4050.2 Chapter Three Section Six includes the following instructions: “A property with defective conditions is unacceptable until the defects or conditions have been remedied and the probability of further | more...

April 4, 2015

House Hunting? Things To Think About On Your Way To An FHA Loan

By Joe Wallace

If you are getting ready to start house hunting and want to buy a dream home with an FHA mortgage, there are a few things to think about as you get ready to start the search for your new house. One very important thing to do is to remember to save up some money for a home inspection. It’s easy to confuse an FHA appraisal, which basically sets the fair market value for the home and insures the property lives up to minimum standards, for a “clean bill of health” for the home. But make no mistake, the FHA does NOT guarantee the home is defect-free even if it DOES pass the appraisal with no corrections. The borrower pays for this optional, but critical service and it’s one that can | more...

April 2, 2015

FHA Home Loan And Refinance Loan Options

By Joe Wallace

If you have never explored your FHA loan options before, you should know what your options are for both refinance loans and new purchase loans. Did you know that FHA mortgages have, in most cases, a lower down payment requirement than conventional loans? The credit-qualifying rules for FHA loans and refinance loans is also more lenient than many conventional loans. For new purchase loans, the type of property you can buy with an FHA mortgage is flexible. You can buy a typical suburban-style home, a condo unit, a mixed use building that is primarily residential in nature, and even a farm home (the loan would be for the residence only). Some lenders may also be willing to issue loans for manufactured housing or modular homes. The type of loan you | more...

March 31, 2015

FHA Clarifies Rules For FHA HECM Loans

By Joe Wallace

The FHA and HUD have clarified rules that govern how FHA Home Equity Conversion Mortgage Loans are handled with regard to “life expectancy set-asides” and calculation of property taxes as part of a borrower’s debt-to-income ratio. FHA Mortgagee Letter 2015-09, “establishes a monthly growth rate for Life Expectancy Set-Asides and clarifies a discrepancy between the HECM Financial Assessment and Property Charge Guide and the model HECM Financial Assessment Worksheet transmitted with Mortgagee Letter 2014-22.” What is a “life expectancy set-aside” and how does the new clarification affect it? According to the FHA, “The Life Expectancy Set-Aside (LESA) is used for the payment of property taxes, and hazard and flood insurance premiums, and will increase each month at a rate equal to one-twelfth of the sum of the mortgage interest rate | more...

March 27, 2015

FHA Home Loan LTV Calculations: A Reader Question

By Joe Wallace

A reader asks, “Is the LTV calculated on the total loan amount (base loan+MIP), or the base loan amount only?” FHA loan rules covering the subject of loan-to-value calculations are found in HUD 4155.1 Chapter Two Section A, which states: “The maximum mortgage amount that FHA will insure on a purchase is calculated by multiplying the appropriate loan-to-value (LTV) factor by the lesser of the property’s –sales price, subject to certain required adjustments, or –appraised value. In order for FHA to insure this maximum loan amount, the borrower must make a required investment of at least 3.5% of the lesser of the appraised value or the sales price of the property.” The 3.5% investment, better known as the borrower’s down payment, is also covered in Chapter Two Section A with | more...

March 26, 2015

Mortgage Interest Rate Trends

By Joe Wallace

Our last look at mortgage loan interest rate trends saw rates making an impressive comeback after some upwards momentum that pushed 30-year fixed rate conventional mortgages up into territory close to the four percent range earlier in the month. That improvement trend has been fairly consistent until yesterday, March 25, 2015, when rates took a big single-day move higher. For about a dozen days now rates have been on the downward trajectory, but yesterday’s move puts 30-year fixed rate conventional mortgages at a best-execution rate of 3.75% depending on the lender. Best execution rates are not available to all borrowers or from all lenders–your FICO scores, loan repayment history and other financial qualifications will play a large role in determining your access to mortgage loan rates. When it comes to | more...

March 26, 2015

FHA Loans With Co-Borrowers: A Reader Question

By Joe Wallace

A reader asks, “Hello. Im a first time buyer my income its from 45 to 50g a year, as i understand i qualify base on my income and fico score. my question is, since my wife did bankruptcy last year , can i include her in the loan for ours first home?” When answering reader questions like this, it’s important to note that state laws have a lot to say in cases where the borrower lives in a community property state. Community property laws govern how new debts are incurred once the legal marriage begins; FHA loans address mortgage loan approval rules in general, but the FHA loan rulebook does not override the law. FHA loan rules in HUD 4155.1 state that all borrowers must credit qualify for the FHA | more...

March 24, 2015

FHA/HUD Announce Trial Payment Plan Details

By Joe Wallace

The FHA and HUD have announced details about a trial payment plan for qualified borrowers who are in trouble on FHA home loans. The FHA mortgagee letter 2015-07, “Trial Payment Plans Associated with HUD’s Loss Mitigation Loan Modification Options for Forward Mortgages” informs lenders of certain details of the program and the conditions where the FHA views a trial payment plan (TPP) as a failure. According to the mortgagee letter, “The Trial Payment Plan Agreement is a written agreement to be executed by all parties on the original note, all parties on the FHA-insured mortgage, and all parties that will be subject to the modified mortgage and/or partial claim, except where: –a borrower or co-borrower is deceased; –a borrower and a co-borrower are divorced or legally separated; or –a borrower | more...