Articles Tagged With: FHA Loan Questions

March 17, 2015

More On FHA Appraisals Versus Home Inspections

In our last blog post we addressed a reader question about FHA appraisals and why appraisals are not considered home inspections. This is a very important issue and deserves some extra attention here for one important reason: an FHA appraisal is never a substitute for a home inspection. Borrowers may be tempted to save a few hundred dollars and skip having the voluntary (as in, not required as a condition of the loan) home inspection performed, but doing so is a very bad idea. An FHA appraisal is, as the FHA official site points out, for the lender and addresses the lender’s needs only. A home inspection, which is not required by the lender as a condition of the loan, is for the borrower and is designed to look out | more...

March 17, 2015

FHA Loan Appraisals and Home Inspections

By Joe Wallace

A reader asks, “Just bought a home and while in crawl space installing drain tile I realized the main sewer line was leaking. The house was unoccupied for 2 years prior to purchase. I have an FHA loan and cannot afford to have contaminated soil removed and line repaired. I realize that I made a mistake buying this home but I felt protected from major issues in getting an FHA loan. What can I do?” The most important question in this situation is whether the borrower paid for a home inspection prior to purchase. It can be tempting for borrowers to rely on the appraisal alone to catch problems or issues with a house, but it’s never a good idea to do so. Why? FHA loan rules are clear–the FHA | more...

March 12, 2015

FHA Loan Down Payment Rules: Sources Of The Down Payment

By Joe Wallace

We often post about FHA loan preparation time, advising borrowers to give themselves at least 12 months before turning in an application for the FHA mortgage. Part of this is so the borrower can check credit reports, but also to insure that at least 12 months have gone by without the borrower missing any payments on financial obligations. Part of this advice also includes the notion that a borrower not apply for any new lines of credit for the 12 months leading up to the loan application for the FHA mortgage. There are several reasons for this, one of the most important being that new credit opens up the potential for a higher debt-to-income ratio. That higher ration can work against the borrower, especially in cases where the debt to | more...

March 10, 2015

Buying A Home With An FHA Loan? Advice And Assistance From The FHA/HUD

By Joe Wallace

If you are considering the purchase of a home using an FHA loan offered by a participating FHA lender, you don’t have to start the planning process in the dark. The FHA official site, www.FHA.gov, has a page of resources and advice you can use long before you start house hunting that can help you be a much better prepared FHA borrower. Not sure how much home you can afford before you start your journey to find the right property? The FHA Home Economics PDF is a very good place to start your research. You can also check out the FHA’s helpful list of housing programs broken down by state–there may be resources in your home state for first time home buyers, or buying assistance programs near you. Explore the list | more...

March 10, 2015

FHA Appraisals: A Reader Question

By Joe Wallace

A reader asks, “FHA mortgages, at one time,required the properties to meet stringent guidelines for habitability; (ie)roof, heating and other standards were the seller’s responsibilities, before escrow closed…. Are these parameters no longer an issue? Can a government secured loan be approved without these conditions being met?” FHA loan rules still require an appraisal of any home to be purchased with a new purchase single family FHA mortgage and certain types of FHA refinancing. The FHA appraisal is required to establish the fair market value of the property and to make sure the home meets basic FHA minimum property requirements. FHA appraisals should not, however, be misconstrued as a seal of approval from the FHA. Just because a home passes the FHA appraisal process with few or no required corrections | more...

What you should know about FHA 203(h) Loans For Disaster Victims

March 9, 2015

FHA Loan Questions: Seller Concessions

By Joe Wallace

A reader asks., “I saw a listing agent who stated in an MLS listing that the seller can only contribute up to 1% of sales price to an FHA qualified buyer’s closing costs. (She was implying not to ask for over 1% seller concession because of this FHA requirement). Is that correct? On your site I read that figure to be a maximum of 6%. Can you clarify please. The home is in Apache Junction, AZ (Phoenix suburb and county of Maricopa).” FHA loan rules state that any seller concession that exceeds six percent is considered an inducement to purchase and will result in a dollar-for-dollar reduction in the loan amount. This is true for all states, not just the one in the reader question, but it is important to | more...

March 6, 2015

Reader Questions About FHA Loan Appraisals: When Do They Expire?

By Joe Wallace

A reader asks, “How long do FHA Appraisals stay with the property in Georgia?” A search of the FHA official site at www.FHA.gov reveals a Frequently Asked Questions page that answers this query, but know that this FHA loan rule applies to all FHA loan appraisals, not just those that are completed in the state of Georgia. According to the FHA FAQ page titled, “Do FHA Appraisals Expire?” we learn the following: “The FHA appraisal validity period is 120 days for existing, proposed or under construction properties. If the Homeownership Center (HOC) determines that soft market conditions exist in certain areas or markets, it may shorten the term of appraisals for substantial rehabilitation upon advance notice to lenders.” When does the 120 day period an FHA appraisals begin? According to | more...

February 27, 2015

FHA Loan Questions: Will The Government Grant Me A Mortgage?

By Joe Wallace

A reader asks, “My question is about getting a mortgage. I have paid off my Chapter 13 BK just recently. As part of that I did short sales on 3 properties back in 2010 & 2011. My credit score is at 690 at this point and we are in good financial shape.” “We have $90,000 in our savings account, $380,000 in liquid assets like 401K, owned property, etc. Our monthly income is over $6000, and my wife makes over $66,000 yearly. Will the government or anyone grant us a mortgage?” In general terms, this reader’s situation sounds like he or she would not have difficulty finding a lender willing to at least consider the circumstances and review FHA home loan options. Getting a new FHA mortgage loan after a serious | more...

February 27, 2015

FHA Loan Debt To Income Ratios

By Joe Wallace

A reader asks, “Hi. My wife and I are planning to buy a house. My wife has a stable job for six years as registered nurse and I is currently a homemaker. Both of us has credit score of 720+ and we never missed a single payment in our credit cards and personal loans. What is our chance to be approved if our debt to income ratio is 49%? Can we qualify for a “no-conforming loan”? (Loan amount is $225,000, please note that mortgage interest, principal, taxes, insurance, HOA fee are already included in the DTI.” According to the FHA official site, many FHA loans are underwritten via an automated system. Here’s a quote from an FHA mortgagee letter from 2013 which announced changes to when and how a lender | more...

February 26, 2015

FHA Appraisals: A Reader Question

By Joe Wallace

A reader asks, “I am working with a home that was built in 1946. The crawl space clearance under the home is suppose to be by FHA standards 18 inches. This home only has 12 to 15 inches. It is not possible to get the dirt out from under this house to meet the requirement. Is there a chance they would waiver this requirement and if so who would I need to contact?” A HUD publication for single family home appraisers mentions the following in relation to the reader’s question: “A minimum distance of 18 inches from the ground to bottom of the joists is highly recommended but not mandated.” The appraiser will enter the crawl space (at a minimum entry of the head and shoulders) to observe conditions except | more...