Articles Tagged With: FHA Loan Requirements

July 13, 2015

What You Should Know About FHA Loan Appraisal Fees

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 13, 2015

FHA Home Loans: Brokers, Escrow, and Fees

By Joe Wallace

There are many expenses and services associated with an FHA home loan. Some borrowers experience confusion over some of these, not knowing which are optional, which are mandatory, and what to do about the expenses. Mandatory services include appraisal fees, flood zone determinations (where appropriate), and credit report fees. Optional services include home inspections (strongly recommended) and brokers. When it’s time to pay credit report fees, the borrower may not be charged more than the actual cost of these services; appraisal fees are required no matter what the outcome of the appraisal. These are two examples of FHA loan fees for services rendered–the service must be paid for no matter what the results of those services might be. With respect to brokers, some might assume that they need a broker | more...

July 9, 2015

FHA Home Loan Closing Policies

By Joe Wallace

In a recent blog post, we discussed some of the rules for closing the deal on an FHA home loan. Did you know that FHA loan rules found in HUD 4155.2 cover specific aspects of the loan closing procedure including taxes, closing costs, and title issues? Chapter Six of HUD 4155.2 explains these policies. For example, in Chapter Six we learn that the lender is permitted to calculate–and collect–property tax payments under the right circumstances: “…The lender may project real estate tax payments, and collect those funds as a portion of the monthly escrow account payment without violating the Real Estate Settlement Procedures Act (RESPA). RESPA requires that a borrower receive an initial escrow account statement at settlement or within 45 days of settlement. In conducting this analysis, RESPA permits | more...

July 9, 2015

FHA Loans, Bankruptcy, and Short Sales

By Joe Wallace

There are many circumstances that can lead to bankruptcy and/or a short sale of the home. We get many reader questions about these scenarios. One recent question involves a married couple who were discharged bankruptcy three years ago, but are currently facing a short sale of their home. Does the couple qualify for a new FHA mortgage loan under such circumstances? There are many factors that could determine whether a lender is able to work with a borrower on a new FHA mortgage or not. One obvious one is credit rating and credit activity since the bankruptcy. Borrowers who have built up good credit since the discharge of the bankruptcy may find a lender willing to work with them–establishing reliable credit history after a “negative economic event” is one of | more...

July 8, 2015

FHA Mortgage Rate Trends: Moving Lower

By Joe Wallace

Mortgage loan rates are as low as they’ve been in about a month; economic headlines from Greece and China are contributing to that move lower, but as some market watchers are quick to point out, it’s important to beware such influence since there’s just as much potential for rates to begin moving higher again if it turns out that these economic conditions–which are currently encouraging investors to behave in ways that currently favor lower rates–aren’t as dire as they seem to be now. We’re still seeing reports of 30-year fixed rate conventional loans at a best execution range between 4.0% and 4.125%, but more lenders are reporting best execution rates at 4.0% than in previous days. FHA mortgage loan rates are also still in their recent range between 3.75% and | more...

July 7, 2015

FHA Loans, FICO Scores and Disputed Credit Reports

By Joe Wallace

A reader question came in recently about FICO scores, medical bills and credit reports; can a borrower’s application be affected by FICO scores that have been lowered due to disputed medical bills and missed payments that may have resulted as part of the dispute? Should a borrower expect difficulty with an FHA loan application if his or her spouse is in such a situation? The answer may depend on a variety of issues and there are several questions that would need to be answered. Are the spouses applying for the FHA loan together? Do they live in a community property state where state law may dictate how credit issues of both spouses are handled in a legal marriage? That is a very important question–not all states have community property laws | more...

July 6, 2015

FHA Loan Interest Rates: The Rules For Lock-Ins

By Joe Wallace

Since we got a recent reader question about the rules and regulations about FHA loan interest rate locks, it seemed like a good time to review the FHA mortgage loan rules that govern them. At the time of this writing, the FHA and HUD are getting ready to transition to a new volume of rules covering FHA Single Family mortgage loan transactions, HUD 4001.1. Until the effective date in September 2015, the previously used references are valid. In general many of the single family loan rules may be the same, but there have been plenty of changes and updates to certain policies. The information below is still valid at the time of this writing. FHA loan rules state, “Under all currently active FHA single family mortgage insurance programs, the borrower | 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 2, 2015

Mortgage Loan Closing: How Difficult Is It?

By Joe Wallace

Every home loan is different. When you apply for an FHA mortgage, you may experience a variety of circumstances along the way that can affect how simple or difficult it is to get to your closing date. Borrowers who prepare ahead of time, who get pre-purchase counseling, and learn from the mistakes of their fellow house-hunters can make the entire process simpler and easier to deal with. That’s one reason why the FHA has a list of resources on its official site (www.fha.gov) aimed at advising new borrowers, but the FHA and HUD are not the only government agencies that offer such assistance. The Consumer Financial Protection Bureau (CFPB) also has a wealth of resources aimed at helping consumers in general, but they also have a special section for house | more...

July 2, 2015

FHA Appraisals: Vapor Barrier Issues

By Joe Wallace

A recent reader question that arrived in our comments section involves an FHA appraisal that required a vapor barrier on all exposed dirt. The reader complained that the FHA appraiser didn’t explain how to correct the issue and asked us to define how it can be done. One objection to the FHA appraisal in this case was that the reader was under the impression that the FHA had removed the vapor barrier requirement from its list of minimum property requirements. While we aren’t experts on vapor barriers or how they are to be carried out, we can address the issue of being required to carry out a correction or repair that is not specifically required by FHA minimum property standards. It’s very important to know that FHA minimums are not | more...