Articles Tagged With: FHA Loan Questions

November 21, 2014

FHA Loan Reader Questions: Non-Functioning Wells

A reader asks, “I bought a home with FHA loan and a well system and septic. Later found the well was a spring box system and not on the property we were forced to buy the property seperate from the house .” “The well has never worked and runs out all the time , i was told that FHA wouyld be inspecting the well system prior to closing , but now we have asked for the inspection and it was never done on the well or the septic systm . Any ideas on where to get help?” It may simply be a case of the way this reader question was worded, but it’s worth pointing out that the FHA itself does not perform well inspections, or similar services. An FHA | more...

October 29, 2014

FHA Loan Rules and Seller Costs: A Reader Question

By Joe Wallace

A reader asks, “What costs will a seller incur if a buyer is using an FHA loan to purchase?” That is a difficult question to answer for a variety of reasons–state real estate law, lender requirements and FHA loan rules all have a say in the closing costs of a FHA home loan. There’s no itemized list of seller costs listed in the FHA loan rulebook, HUD 4155.1, but the FHA does make a list of certain costs and/or seller contributions to the sale that are and are not permitted. For example, the borrower is not to be charged for pest/termite inspections. The borrower can’t pay for the lender’s legal counsel, and the FHA has a set of regulations that dictate how much the seller can contribute toward the sale | more...

October 24, 2014

FHA Loan Refinancing: A Reader Question

By Joe Wallace

A reader asks, “We currently have a FHA loan on our house and our mortgage company says we can not do a refi with a adjustable rate even know we will not be in our house 5 yrs or more. and now we have a 4.75 fixed rate for 30 yrs so what is our best option to get a lower rate cause we will be taking our retirement and social security in the next 2 months and will be in a hardship crisis.” This is a difficult reader question to answer. There are many reasons why a borrower could be turned down for a refinance loan, and some of those reasons can depend on the type of refinancing being applied for–cash out refinancing, for example, may be difficult for | more...

October 15, 2014

FHA Loan Reader Questions: Minimum Property Requirements and Refinance Loan LTV

By Joe Wallace

Sometimes we get lengthy reader questions that require detailed answers, and other times we get quick, easy-to-answer questions. Today we field two of those from readers who want to know some FHA loan basics. Our first reader question: “What are the requirement for houses close to gas station?” It’s not clear exactly what the reader wants to know–more detail is needed for an in-depth answer, but we can probably assume the reader wants to know if there are FHA minimum property requirements for homes located near a commercial gas station. While the FHA loan rulebook doesn’t specifically address this situation, it should be noted that no home located within a “high pressure gas pipeline easement” can be eligible for an FHA home loan. Whether or not this pertains specifically to | more...

October 2, 2014

FHA Loan Credit Report Requirements

By Joe Wallace

When you apply for a home loan, it helps to know what the lender is looking for from your credit report. When it comes to FHA mortgages, the lender wants to see 12 months of on-time payments on your financial obligations as well as the actual numbers of your credit scores as reported by the three major credit reporting agencies. But what does the FHA require from those credit reports? What does the lender need in order to properly document you as a good credit risk? The FHA loan rules for credit report delivery and content are found in HUD 4155.1 Chapter One Section C. A quick glance at this section reveals that credit reports cannot be delivered to the lender from third-parties including the borrower. The credit reporting agency | more...

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

September 30, 2014

FHA Mortgage Insurance: A Reader Question

By Joe Wallace

A reader asks, “Mortgage companies have kept sending letters/emails, saying ‘You no longer pay MIP because FHA MIP policy has been changed since May 2014. You have paid unnecessary MIP payments because since you has refinanced for your home 2012.'” “I refinanced my home mortgage through FHA in Mar.2012 and since then I have paid MIP until principal reach less than 78%. It will be by 2019 according to my mortgage company. Can you clarify ‘Revision of Federal Housing Administration (FHA) policies concerning cancellation of the annual Mortgage Insurance Premium (MIP) and increase to the annual MIP’? Dose cancellation of MIP mean ” home buyers who apply finance through FHA do not need to pay MIP? Should I stay with my current mortgage or refinance?” This reader question refers to | more...

September 23, 2014

FHA Loan FICO Score Requirements: A Reader Question

By Joe Wallace

A reader asks, “I have a plan to pay off my student loan this year which is 18,000.00. My credit score is 565. This will leave me with 0 debt. Will it also improve my credit score and chances of getting a home loan?” These types of questions are difficult to answer because credit reporting agencies have their own criteria for evaluating credit, and apply their own standards for factors that might affect scores pushing them higher or lower. You may find that your FICO score reported by one agency are not the same as reported by another. That’s why FHA lenders look for a FICO score average to determine eligibility. Having no debt is certainly a plus for an FHA loan application, but a borrower’s credit activity in the | more...

September 12, 2014

FHA Condo Loan Questions

By Joe Wallace

A reader asks, “I live in a condominium of 275 homes. We are getting complaints from mortgage companies that we are not FHA approved. We meet all legal guidelines that are required just not for FHA approval.” “We were told by someone that FHA has just recently stopped approving condos for mortgages, is this true? Also what is the percentage of FHA approved condos in Pennsylvania and what is the percentage of FHA approved condos in the entire United States. We have been told it was 10-20 percent. Also what are guidelines that a HOA must meet to be approved for FHA if it were to be considered. Thank you for your help in advance.” We have seen no guidance from the FHA stating that condos would no longer be | more...

September 10, 2014

FHA Loan Reader Questions: Bank Statements

By Joe Wallace

A reader asks, “Is a bank statement, showing the amount needed at closing, required with my application? What is a lender required to ask me for?” In some cases the FHA gives the lender the option of collecting a bank statement, and in others the bank statement is FHA-required. Lender standards may insist on bank statements, so what the FHA allows and what the lender requires may differ; the FHA may not require a bank statement in some cases, but the lender is free to. We can find evidence of this in HUD 4155.1 Chapter Five Section B under the heading, “Cash and Savings/Checking Accounts as Acceptable Sources of Funds” states: The lender must verify and document the deposit amount and source of funds, if the amount of the earnest | more...

September 9, 2014

FHA Loan-To-Value Ratios, Down Payment Requirements

By Joe Wallace

FHA loans are different than conventional loans for a variety of reasons, including the amount of the down payment required. The comparatively lower down payment for FHA loans is one of the biggest advantages–borrowers who have to budget for a smaller down payment have more money to use in other areas of the FHA loan such as the fees for appraisals and compliance inspections. One important question on the minds of many borrowers involves how much the FHA will guaranty on the loan, what the down payment on that amount might be, and how these numbers are calculated. The maximum amount of the FHA loan is different than the maximum amount the FHA will guaranty on the loan. The borrower and lender could theoretically agree on a loan amount higher | more...