Articles Tagged With: FHA Loan Questions

September 2, 2014

FHA Loans: Appraisals Versus Inspections

A reader got in touch recently with the following: “I recently purchased a home with foundation issues. It was not required of me to get a home inspection buy the realtor. However it was required of me to get an appraisal by the realtor.” “It is unfortunate for me that I could not be there during the time of the appraisal, the real estate agent was there . It is also unfortunate for me that I did not survey the garage where the damages exist. Is it proper for a licensed real estate agent to sell property without disclosing foundation issues? I also got an FHA Loan to purchase this property.” It is true that FHA appraisals are required, and home inspections are not. However, no borrower should purchase a | more...

August 28, 2014

FHA Loan Questions: Loan Changes

By Joe Wallace

A lengthy reader question came in recently, which we have edited for space and brevity’s sake. The reader asks, “I am a first time homebuyer & the originator of my FHA loan was (lender name deleted). In qualifying, it was clear my max affordable payment, including principle & interest, escrow, MIP, & interest was $1500 per month.” “During the underwriting process I kept in touch with the broker to ensure no substantial increase in my monthly payment. On the day of closing my payment came in over $400 higher than originally quoted due to an increase in escrow estimation. My broker acted like he was surprised, then told me he later his primary concern was getting my loan closed within 90 days to prevent a new credit report being pulled | more...

August 27, 2014

FHA Eliminates Post-Payment Interest Charges

By Joe Wallace

The FHA has announced the elimination of certain interest payments previously owed beyond the date the FHA mortgage was paid in full. According to the press release HUDNo.14-104, titled, “FHA To Eliminate “Post Payment” Interest Charges, “borrowers who prepay their FHA-insured mortgages will not have to make interest payments beyond the date their mortgage is paid in full.” A new FHA rule known as “Handling Prepayments: Eliminating Post-Payment Interest Charges”, will apply for FHA mortgages closed on or after January 21, 2015. According to the press release, the new rule, “explicitly prohibits lenders from charging borrowers post settlement interest, which is broadly defined as a ‘prepayment penalty’ by the Consumer Financial Protection Bureau (CFPB), for all FHA Single Family mortgage products and programs.” This is an important development for borrowers | more...

August 21, 2014

FHA Loan Rules For Verifiable Income: Retirement Pay and Social Security Benefits

By Joe Wallace

When applying for an FHA loan, many borrowers want to know if certain types of income will count towards their debt to income ratio. The debt to income ratio is calculated by the lender using income that qualifies according to the loan rules spelled out in HUD 4155.1. Not all income can be used–some types of income are not verifiable because the income isn’t considered stable, reliable, or likely to continue. But what does the FHA loan rulebook say about retirement pay and Social Security income? When it comes to retirement pay, the lender is required to document the income and its source. There’s also a consideration as to how long that pay might continue according to HUD 4155.1 Chapter Four Section D, which states: “Retirement income must be verified | more...

August 15, 2014

FHA Loans: Can The Seller Pay Closing Costs?

By Joe Wallace

There are plenty of expenses related to buying a home that house hunters need to save up and/or budget for–loan fees, appraisal expenses, certain types of insurance, even moving expenses should be factored into the equation. But can the seller pay some of these costs on an FHA loan to make the sale more attractive to the borrower? This is a common question among many first-time home buyers and sellers. The answer is yes–but on a limited basis as defined in the FHA loan rulebook. FHA loan rules don’t allow sellers to contribute more than a total of six percent of the sales price of the home without there being a dollar-for-dollar reduction in the loan amount based on the contribution above that six percent. What’s more, FHA loan rules | more...

August 14, 2014

FHA Loan Credit Report Rules

By Joe Wallace

When an individual borrower applies for an FHA home loan, the lender needs his/her employment data, pay stubs, and tax information. The lender will also pull copies of the applicant’s credit reports. But what happens when two people apply for the FHA loan together? FHA loan rules are clearly spelled out for the lender when it comes to credit reports. HUD 4155.1 Chapter One Section C has instructions for the lender that include the following: “A credit report submitted with a loan application must contain all credit information available in the accessed repositories. Additionally, for each borrower responsible for the debt, the report must contain all of the information available in the credit repositories pertaining to • credit • residence history, and • public records information” But the most important | more...

August 12, 2014

FHA Loan Approval, FHA Loan Denial: The Process

By Joe Wallace

When you apply for an FHA loan, sometimes the hardest part is waiting to hear back from the lender that the loan has been approved and all can move forward. Did you know that FHA loan rules have a process for the lender to follow when the loan has been approved or denied? HUD 4155.1 has the guidelines and instructions to the lender for loan approval or rejection. Chapter One of this document has a section called Borrower Approval Or Rejection and tells the lender that, when the loan has been approved, there are a set of steps to be followed. The lender: • records the results of the credit analysis on the HUD-92900-LT, FHA Loan Underwriting and Transmittal Summary • enters any modification of the mortgage amount or approval | more...

August 8, 2014

Who Can Get An FHA Home Loan?

By Joe Wallace

Do you know who is considered legally eligible to apply for an FHA home loan?There are many myths about FHA home loans. One type of myth involves the basic eligibility for an FHA mortgage. Some mistakenly believe the FHA is only for disadvantaged or low-income borrowers. There may be an assumption about a maximum income limit that is not true, and others may assume that the FHA program is only for those who have never purchased a home before. The truth is that any borrower who can qualify with credit scores, debt-to-income ratios and other financial data is able to apply for an FHA mortgage loan. What does the FHA loan rulebook (HUD 4155.1) say about the basic eligibility requirements for an FHA mortgage? According to Chapter Four of the | more...

August 7, 2014

FHA Loan Application Basics

By Joe Wallace

FHA loans are much like conventional loans when it comes to applying and qualifying. Like a conventional loan, your lender will need your credit, income, and employment history data to make a determination on loan approval. Where FHA loans stop being like conventional mortgages includes the amount of down payment required (the FHA has a much lower requirement in many cases), the interest rate (which can also be lower than conventional loans depending on circumstances) and occupancy rules. What are some of the basic things you need to know about FHA loan applications? First, it’s best to be careful when filling out your credit and employment information. Omitting or concealing past issues is not recommended. The lender will get a comprehensive picture of your credit history when looking at the | more...

August 5, 2014

FHA Loan Minimum Property Requirements For Mobile Homes: A Reader Question

By Joe Wallace

A reader asks, “I am applying for refinance on my double wide home and have had an appraisal done and have made all upgrades they have requested. Now they are asking me to have an engineer to come out to inspect the footings that were put in and have a certified engineer sign off on them. I have looked at the requirements and do not see where this is required.” “Can you give me any advice on this? The footings (pillars) were put in according to the manufactures specifications and were inspected at the time of the installation of the double wide.” What FHA loan applicants need to know in situations like these is that FHA minimum property requirements are not necessarily the only rules that apply. The answer to | more...