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Articles Tagged With: FHA Loan Rules

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FHA Loan Rules: A Reader Question About Earnest Money

A reader asks, “A buyer made an application for a FHA loan to purchase a property. The buyer was not able to obtain FHA loan approval by close of escrow and rather than to cancel the contract and receive the earnest money back the buyer and seller agreed in writing to extend the contract’s close of escrow provided the earnest money become unrefundable if the buyer could not close escrow for any reason.” “The buyer was not approved for FHA financing and cancelled the contract yet is claiming FHA overrides the written contract and FHA states the earnest money must be returned to the buyer when the buyer is denied aFHA loan. Does FHA have some sort of rule or authority over a legal contract between buyers and sellers for | more...

 

FHA Loan Reader Questions: Divorce, First Mortgages, and Second Mortgages

A reader asks, “Currently, my husband and I have a FHA loan on our primary residence. We are no longer living together, but still married. I have lived in the home for the last 5 years and paid the first mortgage which is current, never late. My husband inquired a second mortgage on the property in 2006 but is not current on the payments of the second mortgage.” “The second mortgage is in his name only. He filed bankruptcy in 2009 which has been discharged. He did not reaffirm debt of the first mortgage, but he reaffirmed the second mortgage. Can his name be removed from the FHA loan, especially since he is no longer obligated to pay the first mortgage by not reaffirming the debt during his Chapter 7 | more...

 

After The Application: FHA Loan Procedures

When you fill out and submit an FHA loan application, there are a number of steps the lender will take to process your application. Borrowers want to know how long the application review process takes and the answer can vary depending on the lender’s workload, the amount of information that needs to be verified and reviewed, etc. Some borrowers hope for an answer on their FHA loan application in a matter of days, but this isn’t possible–it takes weeks, not days, to verify all the information on your application. One reason for this is the rules the lender is required to observe when verifying employment and credit details. Did you know the lender cannot accept credit reports and similar documents from third parties? FHA loan rules say the lender must | more...

 

FHA Loan Questions: Electronic Signatures

Ever since the FHA announced a wider acceptance of electronic signatures, some borrowers have had questions about the nature of this policy and what documents the FHA’s e-signature guidelines are applicable to. In FHA Mortgagee Letter 2014-03, it was announced that on certain documents not already approved for e-signatures, the electronic version of a borrower’s signature would be recognized the same as a traditional one. But the FHA e-signature policy doesn’t extend to the actual mortgage note itself (in some cases at the time of this writing). Which documents DOES the new policy allow e-signatures on? According to the mortgagee letter: “Unless otherwise prohibited by law or excepted below, FHA will accept electronic signatures on the documents referenced below (collectively referred to as “Authorized Documents”), provided that the mortgagee complies | more...

 

FHA Loan Reader Questions: Down Payments and Bankruptcy

We’ve gotten plenty of reader questions lately on the subjects of down payments, bankruptcy, and eligibility for FHA home loans. Here’s one: “Is there any company that will finance a small condo without a down payment. Thank you” And here’s another: “My wife and I surrendered our home thru a chapter 13. The chapter 13 was a 100% repayment plan that was successfully discharged in December of 2013…We have entered into a lease option home purchase and would like a straight answer on how long of a “waiting period” we must endure before we are able to finance a home again? We also have about $80K in sweat equity against an agreed upon purchase price of $270K. What type of down payment can we expect to need?” FHA loan rules | more...

 

FHA Loans After Delinquencies On A Previous FHA Mortgage

After the housing market crisis that started in 2007, many home owners found themselves in trouble on mortgages. Some simply walked away from their loans, others tried to avoid default and foreclosure, while still others initiated short sales or sold their property for the market value at the time which was most likely far less than they expected to get for the property. Picking up the pieces after something like that can be difficult, and many borrowers wonder if they could be eligible once more for an FHA home loan now that times have changed, markets have improved, and the financial positions of many have also gotten better. For some, the question is, “Can I get an FHA loan after having a past delinquency or going into loan default on | more...

 

FHA Loan Reader Questions: Death of a Co-Borrower

A reader asks, “What happens if your parent co-borrows the loan with you, and they pass away at some point before the loan is paid off?” This is a fairly open-ended question and the answer is just as subject to interpretation because there’s no single law or regulation that applies in such cases. The first place a borrower should look for answers in such cases is the language of the FHA loan contract–what does the contract specify if such a contingency is mentioned? FHA loan rule policies are not the first place to start looking in this case for one simple reason–state law will definitely have something to say about some part of the process. Does the borrower have inheritance issues to deal with in addition to the FHA loan | more...

 

FHA Loan Refinancing: What You Should Know

If you’re interested in refinancing your home loan with an FHA loan but have never explored your refinancing loan options before, there are a few things you should know about the FHA refinancing loan program that can help you make the best choices for your needs and wants. The rules which govern FHA loan refinancing are found in HUD 4155.1, Chapter Three (and elsewhere). In this portion of the FHA loan rulebook. we learn that FHA refinancing loans include the following: streamline refinances of existing FHA-insured mortgages made with or without appraisals no cash out refinances (rate and term) of conventional and FHA-insured mortgages, where all proceeds are used to pay existing liens and costs associated with the transactions cash out refinances How long a term is an FHA loan | more...

 

FHA No-Cash Out Refinancing Loans (With Appraisal): Basic Rules

There are plenty of reasons to refinance a home with an FHA no-cash-out refinancing loan–taking advantage of lower interest rates is one of those good reasons, as is getting into a lower mortgage payment. The FHA offers a variety of refinancing options for single family home loans–what are the basic ground rules for an FHA no-cash-out refinancing loan? For starters, the amount that can be refinanced is, according to HUD 4155.1 Chapter Three Section B, “is the lesser of the 97.75% Loan-To-Value (LTV) factor applied to the appraised value of the property, or existing debt. The total FHA first mortgage is limited to 100% of the appraised value, including any financed upfront mortgage insurance premium (UFMIP).” Chapter Three adds that in general, the maximum mortgage cannot exceed the “statutory limit, | more...

 

FHA Loan Rules: Non-Occupying Co-Borrower Requirements

In a recent blog post we discussed the rules for FHA loans where a non-occupying co-borrower was involved. The scenario we discussed specifically was a parent buying a home with a child (FHA loan rules permit this under the right circumstances), but in general there are FHA mortgage loan rules that apply whenever a non-occupying co-borrower is present. In general, unless the non-occupying co-borrower is a family member, FHA loan rules in HUD 4155.1 say, “When there are two or more borrowers, but one or more will not occupy the property as his/her principal residence, the maximum mortgage is limited to 75% loan-to-value (LTV).” The rules provide an exception to that restriction when the co-borrower is: “related by blood, marriage, or law, such as − spouses − parents-children − siblings | more...