Articles Tagged With: FHA Loan Rules

May 9, 2023

FHA 203(k) Rehab Loan Standards

FHA 203(k) rehab loan standards include a list of things that can be done with a 203(k) rehab loan and a list of ineligible projects. Borrowers should know what is allowed and what is not with these FHA rehab loans. FHA Loan Rules For Renovation, Improvements, Add-Ons In general, FHA home loan programs such as the Energy Efficient Mortgage (which can be used in conjunction with an FHA 203(k) loan) and the FHA 203(k) and FHA 203(h) rehab loan feature a list of approved uses for loan proceeds. There’s a prohibition against cash back to the borrower on these transactions except where it is needed to pay for materials and labor; even then a borrower cannot “profit” from the loan by taking excess funds in cash. FHA loan rules require | more...

May 8, 2023

Is It Smart To Apply For A Home Loan Now?

By Joe Wallace

Is now the right time to apply for a home loan? Some say no, and others may not have a choice but to start looking for a new place to live due to circumstances (new job, change in family size, etc.) and can’t afford to wait out the current market. What are these borrowers to do in an era of interest rate volatility? Mortgage Loan Interest Rates Aren’t Stabilizing Yet At press time, the financial blog headlines talk a lot about mortgage rate volatility. When rates are subject to change like this, it’s tough to predict how things might go week to week or day. A stable mortgage market is more predictable than what we’re experiencing now. After 2022, it’s not shocking that the market must experience a degree of | more...

May 5, 2023

FHA Loans: Terms and Definitions You Should Know

By Joe Wallace

Are you considering buying a home with an FHA mortgage or refinancing a current mortgage loan? If you are new to either process or if it’s been a long time since you purchased your first home, there may be terms and definitions you need to re-familiarize yourself with. Here are some basics you should know: FHA single-family home loans are what most borrowers are after when they want an FHA mortgage to purchase a home, townhome, condo, manufactured home, etc. The idea is basically that the home purchased with the FHA loan is an owner-occupied property that is primarily residential in nature and where at least one of the borrowers or co-borrowers will live once the loan is closed. Occupancy requirements refer to the FHA policy that single-family homes must | more...

May 4, 2023

Interest Rate Issues And Your FHA Mortgage

By Joe Wallace

How high can mortgage loan interest rates go? The highest mortgage rate in American history may have been recorded at a whopping 18.45%. That rate was for a 30-year fixed-rate conventional mortgage in 1981. And what about the lowest mortgage loan interest rate? That may have been the rate we saw in December 2020; 2.68% for a 30-year fixed-rate mortgage, according to Freddie Mac. What influences mortgage loan interest rates? Not the FHA or HUD; these two agencies do not set or regulate FHA home loan interest rates. But other things do affect the rates, indirectly or not: Fed actions to shore up the U.S. economy (more indirectly), investor reaction to those efforts (more directly than Fed acts), whether or not the economy is growing or shrinking, etc. Some Shouldn’t | more...

April 28, 2023

How Much Is Your FHA Mortgage Payment?

By Joe Wallace

Are you new to house hunting? If you have never applied for a home loan before it’s understandable that you might view a mortgage payment as a simple calculation involving the principal and interest multiplied by the number of mortgage payments you have to make. But principal and interest are only two factors that influence how large your monthly mortgage obligation is. FHA Mortgage Insurance Premiums and UpFront Mortgage Insurance Premiums Your FHA mortgage insurance premiums can change how much you pay each month for the home loan. Did you choose to finance the FHA Up-Front Mortgage Insurance Premium or UFMIP? If so, expect an increase in your monthly mortgage costs. Property Taxes Property taxes are part of owning a home, and once you get used to paying them it | more...

How much can I borrow with an FHA refinance loan?

April 27, 2023

UFMIP: FHA Loan Rules

By Joe Wallace

If you are a first-time borrower with questions regarding funding fees like the FHA Mortgage Insurance Premiums (MIP) and Up Front Mortgage Insurance Premiums (UFMIP), you are not alone. Many newcomers to the home loan process are confused by these fees (at first) but there are simple answers for most of these borrower questions. For FHA Single-Family mortgages, the rules for the Up Front Mortgage Insurance Premium are found in HUD 4000.1, starting with the explanation of both UFMIP and MIP: “FHA collects a one-time Upfront Mortgage Insurance Premium (UFMIP) and an annual insurance premium, also referred to as the periodic or monthly MIP, which is collected in monthly installments.” Some borrowers wonder if you can finance the UFMIP and how doing so might affect the amount of the mortgage | more...

April 26, 2023

FHA Loan Pre-Approval

By Bruce Reichstein

What is the difference between FHA loan approval and pre-approval for an FHA mortgage? Some borrowers get confused during the initial process because it’s easy to assume that getting through pre-approval means you’ve been fully approved for the mortgage. The reality is that pre-approval is a tool for the borrower and the lender to determine if you’re ready to buy based on your income, debt-to-income ratio levels, the amount of down payment you have saved, etc. It’s the start of the loan process, but it is not a guarantee that you have an FHA mortgage loan yet. Getting pre-approved for an FHA mortgage means using an online mortgage loan calculator or other tool to add up your income, debts, interest rate, etc. The price of the home or an estimated | more...

April 24, 2023

FHA Loan FICO Score Rules

By Joe Wallace

FICO scores play an important part in any home loan application. There is often confusion about FICO scores, with some applicants assuming that only FICO scores determine loan approval, while others wrongly assume they only have one credit score. What’s the reality? There are three major credit reporting agencies; Equifax, TransUnion, Experian. A borrower may actually have three different scores and the information on one credit report may not be the same on the others, depending on circumstances. That is one reason why lenders encourage borrowers to check their credit reports as early as possible before applying for an FHA mortgage. One credit report could have discrepancies another does not reflect, etc. A borrower should always know what the lender will see on the report before completing the application. FICO | more...

April 21, 2023

The FHA Section 203(k) Rehab Loan

By Joe Wallace

The FHA 203(k) rehab loan is an important FHA mortgage loan option you should know about–this loan is available as a new purchase loan or a refinance loan you can use to buy and rehab a home at the same time. According to the FHA official site, on a page about the 203(k) rehab loan program, we learn that the 203(k) is aimed at borrowers who need to buy and improve or refinance and improve an eligible property. “When buying a house that needs repair or modernization, homebuyers usually have to follow a complicated and costly process. The interim acquisition and improvement loans often have relatively high interest rates, short repayment terms and a balloon payment.” The FHA says its possible to use 203(k) Rehab loans to save time and | more...

April 20, 2023

Five Things You Should Know About FHA Mortgages

By Joe Wallace

Many people still have misconceptions about the FHA home loan program. They might think they “earn too much money” to be a successful applicant (not true, FHA home loans are not need-based loans) or would not qualify because they want to build a home instead of buying an existing-construction house. This is also not true; FHA loans include those for building a home instead of buying one. They are called One-Time Close construction loans, and feature the same FHA FICO score and down payment requirements as other FHA mortgage options. What are the facts about FHA home loans you need to know to make a better-informed decision about your loan choices? FHA Loan Fact: FHA Mortgages Are For Any Financially Qualified Borrower Unlike the USDA home loan program, which DOES | more...