Articles Tagged With: FHA Loan Questions

June 25, 2015

FHA Home Loan Rules and Lender Requirements

We get lots of questions about the specifics of FHA home loans. Some of those questions involve areas that may not be covered specifically by FHA loan rules. Among the questions we got recently, there were some about the loan rules that cover a borrower’s employment status. “I got laid off from my contractor job and rehired elsewhere. The lender is asking for another paystub from the current employer in order to move forward with the loan. Is this true?” FHA loan rules may or may not have a say in such cases, but when the lender informs the borrower that X, Y, or Z might be required in order to move forward with the loan, your loan officer may be referring to the lender’s standards and not necessarily FHA | more...

When Is An FHA Loan Better Than A Conventional Loan?

June 24, 2015

FHA Loan Minimum Property Standards

By Joe Wallace

When you’re shopping for the home you want to purchase with an FHA mortgage, it’s logical to wonder what kinds of standards the property must meet in order to qualify for an FHA loan. FHA minimum standards address a variety of issues including a home’s location, its condition, and how the current state of the home may affect its future value. At the time of this writing, HUD 4155.2 Chapter Four has a set of basic standards that guide the FHA appraiser, which start with the following: “The site conditions of a property must be free of health and safety hazards.” That’s followed by some guidance on homes with lead-based paint. “If the property was built before 1978: –the seller must disclose known information on lead-based paint and lead- based | more...

June 17, 2015

Home Loan Disclosure Changes Coming August 1, 2015

By Joe Wallace

On August 1, 2015, new federal laws will require changes to loan information disclosures that are designed to make borrowers more fully informed. The new requirements affect FHA, VA, conventional and any other type of mortgage loan. The new requirements, announced by the Consumer Financial Protection Bureau, “…will simplify and improve disclosure forms for mortgage transactions. Consumers currently receive different, but overlapping federal disclosure forms with the terms and costs of mortgage loans.” That overlap proves confusing for borrowers, especially those who have never purchased or refinanced a home loan before. Two new forms replace the set of previously required disclosures. According to CFPB.gov, these new forms are, “the Loan Estimate, given three business days after application, and the Closing Disclosure, given three business days before closing.” CFPB says all | more...

June 8, 2015

Things To Do Before Applying For Your FHA Home Loan

By Joe Wallace

If you are in the planning stages of your home buying journey, there are some important milestones you should plan for–things that are crucial to think about before you start filling out your home loan application. One milestone is deciding how much home you can afford to buy. This seems like an obvious move for many reasons, but the amount of your down payment is one factor you shouldn’t overlook when using a home loan calculator or other tools to figure out how much you can spend. When you add up the numbers and arrive at a target home loan amount that’s appropriate to your income level and ability to afford (based on both the amount of the projected mortgage payments AND that amount added in with your current financial | more...

June 5, 2015

FHA Home Loan Refinancing: What You Should Know Before You Apply

By Joe Wallace

FHA refinancing loans give borrowers many options. Did you know that you do not need to have an existing FHA mortgage loan to take advantage of certain FHA refinance options on your loan? You can change lenders, change the nature of your loan from an adjustable rate to a fixed rate, and add energy-efficient improvements to the loan amount. FHA cash out refinance loans permit non-FHA borrowers to apply for refinance loans on conventional loans. You can refinance your existing FHA or non-FHA mortgage from a fixed rate to a new fixed rate loan, fixed rate to adjustable rate, adjustable rate to adjustable rate, etc. Cash out refinance loans always require a new appraisal, even if your current appraisal is still current. FHA loan rules say you cannot use an | more...

June 3, 2015

The FHA Appraisal Process–How Does The Lender Choose Your Appraiser?

By Joe Wallace

The FHA appraisal process is different than the home inspection process. For example, the home inspection is an optional but strongly recommended part of the home buying journey that the borrower is responsible for. You should never purchase a home without hiring a home inspector to review the property. An FHA appraisal–the mandatory, but not exhaustive review of the home–is carried out an an FHA appraiser. This appraiser, according to HUD 4155.2 Chapter Four, is hired as a third party by the lender. Did you know there are FHA loan rules that guide the lender in how an FHA appraiser is to be chosen? According to Chapter Four, the lender must recognize that not all appraisers are equal in skill or experience. “An appraiser who is primarily experienced in appraising | more...

May 27, 2015

FHA HECM Loan Rules: When Can A HECM Loan Be Declared Due In Full?

By Joe Wallace

There have been many changes to the FHA HECM (Home Equity Conversion Mortgage) program in recent months. If you are a qualified HECM loan applicant exploring your options now after having researched them a year or two ago, it’s likely you will need to re-familiarize yourself with the FHA HECM rules and regulations as many have had important changes made. HECM loans still feature the usual conditions–failing to use the home as the primary residence, for example, can still result in the HECM loan being declared due in full. That hasn’t changed, but some other conditions that trigger a due-in-full demand have. One such change involves when a HECM loan can be declared due in full because of failure to meet HECM loan “property charge” requirements. Did you know that | more...

May 26, 2015

FHA Loan Rules For Short Sales: A Reader Question

By Joe Wallace

A reader asks, “I filed a chapter 7 in 2009 and listed my home in the bankruptcy as it tuned out I tried to short sale but the bank told me no. so I filed and it discharged in 2009. The bank did nothing for 7 years. I moved out of the home in 2009 and it remained empty for 7 years. I purchased another home (hard money loan) in 2012. I improved my credit rating and I want to refi my home. The bank finally let me short sale the home in 2014 it sold. What is going on the lenders are telling me that there going by the short sale date not the bk date. Can you help?” There are two issues at work in these situations–FHA loan | more...

May 22, 2015

FHA Loan Rules, Bankruptcy, and Short Sales

By Joe Wallace

A reader asks, “My bankruptcy was discharged in August of 2012. We did not reaffirm the mortgage either. One year later I short sales the house (August of 2013 it was sold). The short sale is not on my credit report nor are any missed payments. I was in the process of a mortgage modification when I filed bankruptcy. The firm that I used (which was later investigated by the FTC for mortgage fraud) promised they could take 100,000 off my loan (apparently some things are too good to be true). This under the advice of multiple lawyers I filed bankruptcy.” “I worked w a previous lender who put me threw du (or bu- the underwriting test used by fha). I passed that but he later took the approval back | more...

May 22, 2015

FHA Loan Questions: Appraisal Outcomes

By Joe Wallace

A reader asks, “I am the seller and was told by the buyers inspector that fha required that Federal Pacific Electrical stab lok was required to be replaced due to the potential that it Might Cause a safety issue. Any electrical can have a potential safety issue. My home was built in 1987.” While there isn’t a specific question here, the implied question seems to be, “Why was this correction required during the appraisal process?”. Any correction or repair that comes from the appraisal process could be required because A) the condition fails to meet FHA minimum property requirements or B) the condition fails to live up to state or local building code or C) there is another law or rule which must be satisfied. FHA loan appraisal guidelines are | more...