Articles Tagged With: FHA Loan Questions

June 29, 2016

FHA Loan Questions: Legal Ownership Of A Property To Be Refinanced

A reader asks, “I have a FHA loan that I received with my ex wife we have been divorced for approx. 7 years. Due to the amicable nature of the divorce we did not specify that I would keep possession of the house, we have a gift of deed.” “But the mortgage company says I can not refinance because there is no clause in the divorce decree about house ownership transfer. Wouldn’t the deed of gift be a legal binding document to prove ownership?” FHA loan rules found on page 126 states, “A refinance transaction is a new Mortgage for a Borrower with legal title on the same Property with the proceeds used to pay off any existing liens”. We don’t give out legal advice or opinions here as it’s | more...

June 24, 2016

FHA Loan Questions: Co-Borrowers

By Joe Wallace

A reader asks, “My husband is a co burrower on his mothers mortgage loan and he has been asking her to remove his name from it but she hasnt. The mortgage has affected his credit and has made it hard to get a home of our own. Can his name be removed from the mortgage or is this something we need a lawyer for?” Before answering this question, let’s examine how the FHA defines the role of a co-borrower. Page 128 of HUD 4000.1 states: “To be eligible, all occupying and non-occupying Borrowers and co-Borrowers must take title to the Property in their own name or a Living Trust at settlement, be obligated on the Note or credit instrument, and sign all security instruments. In community property states, the Borrowers | more...

June 23, 2016

FHA Loan Questions: Self Employment

By Joe Wallace

A reader asks, “I am working on getting an FHA loan and my lender asks that I provide W2s. I am self employed via my own business as well as had a regular job how will this affect my loan being that i have no W2 and that my taxes were done via 1099 and 1040 forms for myself and my business?” In cases like these, the lender will require whatever tax documentation that is available to show proof of income. For self employed borrowers, the lender may also require additional documentation such as profit and loss statements, business plans, and other items that may be required. Lender standards will apply so FHA loan rules and minimums are only part of the equation. FHA loan rules in HUD 4000.1 do | more...

June 21, 2016

More On FHA Adjustable Rate Mortgages

By Joe Wallace

In a previous blog post we discussed FHA adjustable rate mortgage loans and looked at some aspects of how these loans work. FHA adjustable rate mortgages, also known as ARM loans or FHA ARM loans, feature an introductory rate that the borrower and lender will negotiate. This rate will expire at some point and the new rate will be calculated. The interest rate adjustments over the lifetime of the loan are regulated by an FHA requirement that includes a cap on the amount and severity of the rate changes. As we discussed in the last blog post, there are four components to an ARM loan you should know, which include the following: 1. index 2. margin 3. interest rate cap structure 4. initial interest rate period (also known as a | more...

June 17, 2016

FHA Loan Questions: Liens and Loan Approval

By Joe Wallace

We get many different types of questions about FHA home loans and refinance loans in our comments section. Here’s one of the latest, asking about applying for an FHA mortgage with a lien on the credit record: “I had a lien that was paid off by a relative and the lien released. Is the IRS required to release the date the lien was paid off to the underwriter or is the notice of release sufficient? The debt has been paid, isnt that all that matters?” The most important thing, in general terms, is that there is documentation of the paid-off lien for the lender to review. Without documentation, the lender cannot assume the lien has been paid to the satisfaction of the creditor. While it is true that satisfying the | more...

June 16, 2016

FHA Loan Questions: Legal Issues

By Joe Wallace

A reader asked us a question in the comments section recently about legal issues. “My husband and I assumed my father in laws mortgage back in 2013 with him as a non occupant co-borrower. We have never seen the title and hes withholding it from us. Is this legal for him to do? Also, if our name appears on the tax bill, Does that mean we are listed on the title as well?” There are many things that can affect the answer to questions like these. State law is a big one. Laws vary from state to state as to the nature of certain aspects of home loans, ownership, etc. Another factor is the type of home loan the borrower has. Is this reader’s question about an FHA mortgage, conventional | more...

June 7, 2016

FHA Loan Questions: Switching To Commission Income

By Joe Wallace

A reader got in touch with us to ask a question about how the FHA views commission income. This question came in response to an older blog post from 2013, well before the FHA and HUD switched over to the new FHA loan rulebook, HUD 4000.1: “I have currently been employed with the same company and same job title for 7 years, I have the opportunity to switch from an hourly wage to a commission percentage but still keep my same job at the same place.I will make a lot more. How will switching to commission affect my approval for a home mortgage? I plan on buying next year maybe a little sooner.” FHA loan rules for verification of commission income are clear. HUD 4000.1 starts off by defining commissions | more...

June 3, 2016

FHA Loan Questions and Answers

By Joe Wallace

Tired of renting and looking to purchase a home of your own? There are many questions many first time home buyers or first time FHA loan applicants have. Here is a list of some of the most frequently asked questions about FHA mortgages. Is There An Income Limit For FHA Loans? No. FHA mortgages are not designed specifically for one type of financial situation or another. You cannot “earn too much” with the FHA single family home loan program. All wage earners are encouraged to explore their FHA loan options. Is There A First-Time Home Buyer Advantage Or Preference With FHA Mortgages? While an individual lender may offer certain perks for first-time home buyers, the FHA single family home loan program itself does not have a first time home buyer | more...

May 31, 2016

FHA Loan Questions: The Good Neighbor Next Door Program

By Joe Wallace

A reader asked us a question recently in the comments section about the HUD Good Neighbor Next Door program. “I am a 13 year veteran Corrections Officer of the Maryland’s DCSCS and I wanted to inquire as to whether or not I qualified for the Good Neighbor Next Door Program.” The HUD Good Neighbor Next Door program is mentioned on the FHA/HUD official site, which states, “Law enforcement officers, pre-Kindergarten through 12th grade teachers, firefighters and emergency medical technicians can contribute to community revitalization while becoming homeowners through HUD’s Good Neighbor Next Door Sales Program. HUD offers a substantial incentive in the form of a discount of 50% from the list price of the home. In return you must commit to live in the property for 36 months as your | more...

April 20, 2016

FHA Loan Questions: Identity of Interest Transactions

By Joe Wallace

For some FHA home loans, a higher down payment may be required when there is an “identity of interest” transaction. FHA loan rules in HUD 4000.1 define this as follows: “An Identity-of-Interest Transaction is a sale between parties with an existing Business Relationship or between Family Members. Business Relationship refers to an association between individuals or companies entered into for commercial purposes.”An identity of interest transaction requires a 15% down payment unless the borrower qualifies for an exception. With this in mind, let’s look at a recent reader question in our comments section. A reader asks, “My wife and I went under contract on a house that is owned by her stepfather. We just found out yesterday about the FHA identity of interest certification. It is his rental property. Is | more...