Articles Tagged With: FHA Loan Questions

July 29, 2015

FHA Loans And Your Credit

A reader got in touch with us this week to ask if it is possible to get an FHA mortgage loan even if the borrower doesn’t have “perfect credit”. While it’s not clear what the reader means by that phrase, we can answer the question in a general way. The simple answer is yes, borrowers can apply for and get approved for FHA home loans with less than perfect credit, but much depends on the nature of the credit issues on your report and whether there’s an overall pattern of responsible credit use the lender can use to justify approving your home loan. FHA loan rules are clear that individual mistakes in a borrower’s past should not be the sole determining factor when it comes to approving or denying an | more...

Can I buy a manufactured home with an FHA loan?

July 24, 2015

FHA Loan Questions: Late Payment History

By Joe Wallace

A recent reader question about FHA loans and missed payments reminds us how important it is to examine your credit report and repayment history on all financial obligations long before you apply for a new home loan. The reader wanted to know if late payments on a student loan would affect chances for FHA home loan approval. The question mentioned that the reader’s current mortgage loan is current, but that late payments on the student loan were on her credit record. Does this reader have a chance for a new FHA loan? The answer is complicated because of two things. A borrower with a current mortgage trying to apply for a new purchase FHA home loan would have to declare that the new home is to be the borrower’s primary | more...

July 20, 2015

FHA Loans, Seller Concessions, and Cash To The Borrower

By Joe Wallace

We recently got a question about an FHA loan situation where the seller of the home agreed to pay 3.5% of the closing costs on a transaction. According to the reader question, the “actual permitted seller concessions” were much lower. The reader asked, “Since FHA would not allow cash back”, the buyer asked the seller for the difference of the two amounts to be paid to the borrower, “outside of closing” The question the reader asks: Is this legal? FHA loans do not permit cash back to the borrower except in the form of refunds. However, HUD 4155.2 does include some guidelines for seller concessions, which are limited to six percent of the sales price. Those guidelines do permit “monetary gifts” as we’ll read in a moment. Chapter Four of | more...

July 17, 2015

House Hunting And Your FHA Home Loan

By Joe Wallace

There are many things you can do before and during your house hunting process to make buying your new home much easier. Do you know what home buyer resources are available in your state? Have you compared lenders both online and at the branch? Are you considering FHA loan pre-approval? Getting pre-approved is a very good step. It helps you establish a relationship with a participating FHA lender, and gives you a much better idea of what kind of price range and other factors you might need to consider when house hunting. Pre-approval forms will ask you those difficult questions–“How much do you want to spend on your home?” and “What size home do you need?” The pre approval question also forces many borrowers to think about their house needs | more...

July 13, 2015

What You Should Know About FHA Loan Appraisal Fees

By Joe Wallace

Based on the reader questions we get in our comments section, there can be some confusion over the nature of FHA appraisals, appraisal fees, and compliance inspections. The appraisal process is an important part of the overall experience of buying a home with an FHA mortgage loan; borrowers should budget for appraisal fees and anticipate needing to pay for a compliance inspection (just in case). The appraisal process can include a required compliance inspection should the appraiser note conditions that must be corrected as a condition of loan approval. The compliance inspection requires a separate fee and when it’s time to budget for the appraisal process the borrower should assume the compliance inspection might be required. The amount of the appraisal fee and compliance inspection fee will vary depending | more...

July 6, 2015

FHA Loans, Interest Rate Locks, and Lender Standards

By Joe Wallace

We recently got a reader question about FHA loan interest rate locks–the borrower signed a contract for an FHA loan at a certain interest rate, then was told later that the rate would be higher because the paperwork was signed after a certain point in the day when the interest rate lock had to be submitted in order to guarantee the rate. Does the borrower have any recourse? This is a tricky question to answer because at first glance, if two parties have signed a legally binding agreement, it stands to follow that one party cannot simply go back and change the terms of that agreement. To say that the borrower would not be eligible for the rate agreed upon in writing by both parties in the legally binding document | more...

July 3, 2015

FHA Home Loans: Pre-Purchase Counseling, HECM Loan Counseling

By Joe Wallace

We often write posts that encourage borrowers to examine their pre-purchase counseling options before starting on the journey to apply for an FHA mortgage loan. We also write posts for eligible Home Equity Conversion Mortgage (HECM) loan applicants discussing HECM loan counseling. Some borrowers might wonder what the difference is between the two. There are some obvious differences. HECM loans are a type of refinancing loan for eligible borrowers aged 62 and older that requires no monthly payments and comes due when the borrower dies or sells the home. FHA single family home “purchase loans” are for borrowers looking to buy a home with an FHA guaranteed mortgage. So up front, many of the concerns a borrower has with a new purchase loan differ greatly than those for any refinance | more...

June 30, 2015

Planning For An FHA Home Loan? Pull Your Credit Reports For Free

By Joe Wallace

If you are in the planning stages before purchasing a new home with an FHA mortgage loan, it’s a very good idea–strongly recommended, in fact–to pull your credit reports from the three major credit reporting agencies. It’s best to request copies of your credit reports as early as possible in the process so that you have abundant time to dispute any outdated information, investigate evidence of identity theft, etc. Many people in this stage go to the official sites for the three major agencies–Equifax, Experian, and TransUnion. But did you know that federal law permits borrowers to get a free credit report from these three agencies once every 12 months? According to the Federal Trade Commission official site (https://www.ftc.gov/), anyone who wants the free reports can order them from annualcreditreport.com, | more...

June 27, 2015

FHA Loans Post-Bankruptcy? When To Apply?

By Joe Wallace

Borrowers who have filed for bankruptcy, or who have had other financial difficulties resulting in negative credit, may have questions about the timing of their next home loan application. We get many reader questions about this–some ask “When can I apply for a new loan?” or, “How long should I wait until I apply?” Others want to know if their credit scores are good enough, writing that they have scores within a certain range and whether those scores are enough to qualify. Bankruptcy, foreclosure, and other negative-credit actions may require specific waiting periods before you can apply again. Some of these are dependent on circumstances, lender standards and other factors–there often is no one set answer for borrowers who meet certain parameters. If you have these types of questions, one | more...

June 26, 2015

FHA Streamline Refinance Loans: Appraisal Required?

By Joe Wallace

When you examine your streamline refinance options, it’s easy to get confused over the difference between lender requirements and FHA refinance loan standards. FHA Streamline Refinance Loans are intended for borrowers with existing FHA mortgages and can be done on any type of existing FHA loan–fixed rate, adjustable rate, graduated payment mortgage, etc. Some borrowers want to know if there is a new credit check or appraisal required. There is no short answer to this because while FHA loan rules do not demand a new appraisal, the lender may require one. The credit check issue also depends on a variety of circumstances including the type of refinance transaction (fixed rate to adjustable rate, for example) and how long the borrower has owned the property. FHA loan rule spell out some | more...