Articles Tagged With: FHA Loan Requirements

April 21, 2015

FHA Loan Closing Costs

One common question asked about FHA home loans involves closing costs. Many FHA borrowers want to know how much to expect in the form of closing costs, but the simple answer to these question is, “it all depends”. Depending on what? No two housing markets are the same, and no two lenders are exactly the same either. The amount of closing costs you have to pay will vary based on these factors plus how state law may affect your transaction, possible property tax issues, how much is charged in your local area for certain services rendered, etc. Cost of services may vary, but the FHA has built in some protections for the borrower when it comes to those charges. HUD 4155.2 Chapter Six has some things to say about closing | more...

April 20, 2015

FHA Home Loans and Your Credit Report: Disputing Errors

By Joe Wallace

Some borrowers who want to apply for an FHA loan find their applications held up by problems with what is on their credit report. Are you finding outdated or even erroneous information on your report? There is some good advice for those who find themselves in this predicament, thanks to a government website called ConsumerFinance.gov. A page there titled, “How do I dispute an error on my credit report?” has some very good advice about corrected errors on your credit report, starting with: “Contact both the credit reporting company and the company that provided the information. You should explain what you think is wrong, why, and include copies of documents that support your dispute.” When you deal directly with a creditor, there are certain types of disputes the credit will | more...

When Is An FHA Loan Better Than A Conventional Loan?

April 20, 2015

FHA Home Loan Rules On Fair Housing

By Joe Wallace

April is Fair Housing Month, and the FHA/HUD official site has a variety of resources for borrowers who want to know more about Fair Housing Act laws, and how such laws pertain to both borrowers and lenders. The FHA and HUD are quite serious about equal access to housing, but what do FHA home loan rules say about Fair Housing rules and how are participating FHA lenders expected to comply with those rules? HUD 4155.2 Chapter One, Section B has some important guidelines: “HUD is responsible for enforcing the Fair Housing Act. The Fair Housing Act, contained in 42 U.S.C. 3605, prohibits discrimination in residential real estate-related transactions, such as • making or purchasing loans or providing other financial assistance, and • the terms and conditions for making available loans | more...

April 17, 2015

FHA Loans After Foreclosure, CAIVRS, and Lender Standards: A Reader Question

By Joe Wallace

A reader asks, “We have some questions regarding applying for a mortgage. we have extenuating circumstances that are keeping us from being approved and so we are looking for some direction. First my income, I am a Rn working through an agency therefore, a large portion of my weekly pay in non taxed. The first lender could not verify my income because my w2 is less then my take home pay. We went with another mortgage broker and they were able to verify my income. Then as we were going through the process, our CAIVRS # was declined.” “We cleared it up with FHA and they gave us the green light to proceed with a mortgage, however, our lender is still declining us . What happened was we had a | more...

April 16, 2015

FHA Mortgage Rate Trends–Mostly Improving Since 9 April

By Joe Wallace

On April 9, 2015, mortgage rates moved higher than they had been all month–not saying much since the month was only nine days old, to be sure. But since that time, rates have improved. There have been some ups and downs (yesterday mortgage rates experienced some weakness depending on the lender, but overall in the last four business days we’ve seen improvements.) but overall we’re still seeing rates holding at or near levels we reported last time. 30-year fixed rate conventional mortgages have been, at the time of this writing, at or near 3.625% (best execution), but in a range that tops out at 3.75% (again, best execution and depending on the lender). FHA mortgage loan rates are holding in a comfort zone between 3.25% and 3.5% best execution. Until | more...

April 11, 2015

FHA Appraisals Versus Home Inspections: Part Two

By Joe Wallace

A reader asks, “My follow up question is that I believed that there would be an FHA inspection done and if serious problems or defects are found then the seller would be required to fix the issues. I realize FHA does not “check” for everything so a home inspection is still in order, but has this rule changed?” This is a follow-up to our answer to this reader’s question in our April 3, 2015 post, “Is A Home Ever ‘FHA Approved'” where we answered the original question as follows: “…there is one serious issue raised here that we MUST address–the prevailing misconception some borrowers have that the FHA or HUD would ever ‘approve’ a home. Some borrowers mistakenly assume that because a home passes the appraisal process that it is free | more...

April 9, 2015

FHA Loan Interest Rates

By Joe Wallace

Many potential FHA borrowers want to know more about the ins and outs of mortgage loan interest rates. When it comes to FHA mortgages, it’s easy to misunderstand the relationship between a participating FHA lender and the FHA itself. For example, some assume that the FHA sets and/or regulates mortgage loan rates (it does not). So if the FHA does not set or regulate the interest rates on an FHA mortgage or refinance loan, who does? The short answer is that the lender sets the rates. The FHA loan rule book only requires that lenders set rates that are “reasonable and customary” based on similar loans. But market forces that affect other types of mortgage interest rates also affect FHA rates. The borrower and lender negotiate the FHA loan rate | more...

April 7, 2015

FHA Loan Appraisal Rules: A Reader Question About Basements

By Joe Wallace

A reader asks, “We have signed a contract to sell our home to an FHA buyer. The Realtor said that he sees “no glaring” issues and we have disclosed that we have a seasonally damp basement. Will this be an issue?” The answer to this question may depend on state or local building code, and whether or not the FHA appraiser will note the condition as something that needs to be corrected if possible. HUD 4050.2 spells out some of the unacceptable conditions that could render a home unacceptable for an FHA mortgage loan unless those conditions are deemed repairable. HUD 4050.2 Chapter Three Section Six includes the following instructions: “A property with defective conditions is unacceptable until the defects or conditions have been remedied and the probability of further | more...

April 7, 2015

FHA Loans and Verifiable Income Sources: A Reader Question

By Joe Wallace

A reader asks, “I have a notarized agreement with the father of my child to receive a total amount of cash distributed in two or more deposits during the month in my account.” “I receive it on Cash and then I deposited in my bank account. My lender deny me the loan because they need to see the whole amount agreed in only one single deposit. Is that true? How can I properly prove and evidence this income?” It’s important to remember that FHA home loans have two sets of standards which must be followed–basic FHA loan guidelines are one, and participating lender standards are another. Depending on the laws of your state, lender requirements, and other factors, a borrower may find questions such as these tough to get a | more...

April 4, 2015

House Hunting? Things To Think About On Your Way To An FHA Loan

By Joe Wallace

If you are getting ready to start house hunting and want to buy a dream home with an FHA mortgage, there are a few things to think about as you get ready to start the search for your new house. One very important thing to do is to remember to save up some money for a home inspection. It’s easy to confuse an FHA appraisal, which basically sets the fair market value for the home and insures the property lives up to minimum standards, for a “clean bill of health” for the home. But make no mistake, the FHA does NOT guarantee the home is defect-free even if it DOES pass the appraisal with no corrections. The borrower pays for this optional, but critical service and it’s one that can | more...