January 19, 2015
Happy Martin Luther King Day! We pause from our usual posts about FHA home loans, and answering questions about FHA mortgage loans in order to observe this very important holiday. Our regularly scheduled posts will resume tomorrow. In the meantime we stop to reflect on the work and accomplishments made by Doctor King. Happy MLK Day!
January 15, 2015
A reader asks, “When calculating the annual PMI, are the bps assessed against the original loan amount or the current pay-off amount of the loan?” Assuming the reader is asking about annual FHA Mortgage Insurance Premiums, and not monthly Private Mortgage Insurance, it’s important to know the following: When the FHA and HUD announced a reduced annual Mortgage Insurance Premium, it created a table showing how the new Mortgage Insurance Premium (MIP) is calculated. FHA MIP is calculated, according to the FHA/HUD official site, by “amortization term, base loan amount and Loan to Value (LTV) ratio.” Here is the table published by the FHA showing the new FHA MIP rates: As you can see, there is a listing for the previous FHA MIP payment and the new FHA MIP payment. | more...
January 15, 2015
A reader asks, “We recently went through CH7 BK. We have high 500′s for both of our scores and have no debt besides one student loan at $90.00 a month and two credit cards with $0 balance and no payments due. What would our chances be of obtaining an FHA for first time home buyers. We have $5000 to put down and have a city program that will also help with more $ for closing/down payment. We want to buy in September/October. which would be 10 months after our BK discharge.” There are a variety of issues at work in this reader question that should be addressed. Regardless of the bankruptcy issue, borrowers in general will find lenders requiring FICO scores upward of 620 for FHA home loans. It’s true | more...
January 14, 2015
A reader asks, “I just got an FHA loan last May. Do I qualify for a reduction when it happens?” This question comes in reference to our previous blog post discussing the FHA announcement that annual FHA mortgage insurance premiums would be reduced in 2015, amounting to a savings as much as approximately $900 per year (according to a speech by President Barack Obama). Our post, “FHA Announces Mortgage Premium Cut” included the following details on the new FHA policy: “An FHA/HUD press release (HUDNo. 15-001) announced the change, which could take effect as early as the end of the month. According to the release, ‘As the nation’s housing market continues to improve, U.S. Housing and Urban Development Secretary Julián Castro today announced the Federal Housing Administration (FHA) will reduce | more...
January 9, 2015
Some homeowners who purchased homes with FHA loans could save as much as $900 a year thanks to a reduction in the FHA mortgage insurance premium announced by the FHA and HUD. An FHA/HUD press release (HUDNo. 15-001) announced the change, which could take effect as early as the end of the month. According to the release, “As the nation’s housing market continues to improve, U.S. Housing and Urban Development Secretary Julián Castro today announced the Federal Housing Administration (FHA) will reduce the annual premiums new borrowers will pay by half of a percent.” Half a percent may not sound like a lot to some, but according to the FHA official site, that half-percent reduction “is projected to save more than two million FHA homeowners an average of $900 annually | more...
January 9, 2015
A reader asks, “My husband and I live in Texas and want to buy a home. My husband makes around $40,000 a year and has decent credit. I am self employed so my tax return shows I only make around 25,000 a year after deductions. All of the debts are in my name and I have the better credit score. My question is, wouldn’t it be better to put the home loan in his name only being that he has no debt? Can we get an FHA loan in his name only?” It’s true that FHA loan rules differ for self-employed borrowers. You may be required to furnish additional documentation along with the usual FHA loan paperwork–profit and loss statements, business tax documents, anything that can show the borrower has | more...
January 3, 2015
We have written a great deal in this space about FHA home loans and how they are affected by the Fair Housing Act, which governs fair lending practices connected with home loans (among many other things). The Fair Housing Act governs all housing transactions in the United States and violations of this federal law are, when reported, investigated and prosecuted accordingly. How does the Fair Housing Act work? According to the FHA and HUD official site, “Federal law prohibits housing discrimination based on your race, color, national origin, religion, sex, familial status, or disability.” What doe these terms mean? Race discrimination can be fairly obvious, but questions of sex, family status or disability are often harder to define. An applicant cannot, for example, be denied a home loan or a | more...
January 2, 2015
With 2014 now over, many look ahead to the new year’s potential trends for FHA mortgage loan rates and refinance loan rates. But looking ahead also means looking back–what happened at the end of the year is sure to be a factor in figuring out where rates could go in early 2015. Mortgage rates over 2014 moved within a narrow range, but that range was marked by lower rates–when the FHA best execution rate broke below the four percent range and into the high threes, at first some thought it might just be a flash-in-the-pan move soon overtaken by upward pressure on rates. But what was potentially a quick dip into the high three percent range (best execution) turned into a downward trend that ended up in a comfort | more...
November 18, 2014
The FHA has announced an extension to a program started to help borrowers who are underwater on their mortgages. FHA mortgagee letter 2014-23 describes the original “FHA Refinance of Borrowers in Negative Equity Positions” program started in 2010 which, according to the FHA/HUD official site, “provided enhancements to the Federal Housing Administration (FHA) refinance program that gave a greater number of responsible borrowers an opportunity to remain in their homes.” These FHA enhancements were designed, “to maintain homeownership by providing borrowers, who owe more on their mortgage than the value of their home, opportunities to refinance into an affordable FHA loan. This opportunity allowed borrowers to qualify for an FHA refinance loan provided that the lender or investor wrote off the unpaid principal balance of the original first lien mortgage | more...
November 14, 2014
The FHA has issue another set of revisions, clarifications, and consolidation to its Home Equity Conversion Mortgage Loan rules. An FHA mortgagee letter, 2014-21, adds a large number of changes and clarifications. Many of the new changes have to do with key parts of the HECM loan process including limits on the amount of funds that can be “advanced at loan closing and during the First 12-Month Disbursement Period after loan closing” and also explaining which fees and charges are “Mandatory Obligations” under the FHA HECM program. One change announced in the mortgagee letter affects those who are paying off a non-FHA HECM loan with funds from the HECM loan. According to the FHA, the new rules include the following instructions to the lender: “Mortgagees may only permit the payoff | more...