Articles Tagged With: FHA Loan Rules

One-Time Close Construction Loan Options For Veterans

June 9, 2022

Questions To Ask About FHA Construction Loans And 203(k) Rehabilitation Loans

There are FHA mortgages that let you build a home from the ground up on land you already own or purchase in conjunction with the mortgage. These are called FHA One-Time-Close mortgages. There are also FHA loans that can help you buy and renovate a home. These are called FHA 203(k) Rehabilitation loans and they are also available as an FHA refinance option. Both types of loans will require you to use escrow, hire builders, and have custom work done. And if you have never done this before, there are a few things to know going into the process. Did you know that not all builders are suitable for construction loans? Not every licensed contractor has experience with a large project such as a home renovation, and you will want | more...

June 2, 2022

Applying For Your FHA Mortgage

By Joe Wallace

After you have gotten all the planning done, and after you have saved for your downpayment and gone house hunting, you’ll come to the place where you are finally ready to apply for a home loan. What do you need to know about this process and how it works? One of the most important things to decide is how much personal help you might need to apply. There are three basic options that may be open to you depending on the lender. Whether you need to pre-qualify, get pre-approved, or actually begin the application process itself, your lender may take a specific approach to how your loan documentation and application data is submitted. Some lenders take a very hands-off approach, allowing you to apply and submit online without requiring any | more...

June 1, 2022

June 2022 Is National Homeownership Month

By Joe Wallace

On the last day of May 2022, President Biden issued a proclamation that June 2022 is National Homeownership Month. It’s the 20th anniversary of the observance and the Department of Housing And Urban Development issued a statement about it, reminding us that homeownership has benefits and that equal opportunity and access for all should be the norm in the 21st century. During National Homeownership Month 2022, the FHA and HUD plan a series of events designed to raise awareness of fair housing issues, increase the amount of affordable housing, and make the homeownership process sustainable. “Each June, we mark National Homeownership Month, a time for HUD and FHA to renew our commitment to supporting individuals and families in achieving and sustaining homeownership,” says HUD Secretary Marcia L. Fudge, who was | more...

May 31, 2022

FHA Loans And Home Equity

By Joe Wallace

How soon do you need to start thinking about home equity? Believe it or not, you start making decisions about equity right away in the planning and saving process of your loan. How? The amount of money you save for a down payment is a decision that directly affects the amount of the loan you want. The bigger your down payment, the more potential equity you could start out with. Essentially your home’s equity is the difference between the current market value of the home and how much you owe on the mortgage. That’s one reason why a bigger down payment affects your equity–you’ll start out owning the mortgage amount minus that money down. Since the equity in your home is subject to change, it’s important to pay attention to | more...

May 26, 2022

What You Should Know About Using An Escrow Account For Your FHA Loan

By Bruce Reichstein

Are you planning to buy a home? Whether you seek an FHA mortgage or not, you may be required to use an escrow account for the loan transaction. You will need a safe place to deposit earnest money in the buying phase and you may also need escrow to pay your property taxes each year. FHA Loans Require Escrow Your participating FHA lender may require the use of an escrow account. Are you applying for an FHA 203(k) Rehabilitation Loan or an FHA One-Time Close Construction loan? Both types of mortgages require payments to contractors who are renovating or constructing your home. FHA loan funds must be stored in escrow until it’s time to use them. There is no unrestricted cash back to the borrower with these loans, so escrow | more...

Home Loans For Building On Your Own Land

May 24, 2022

Building Your Home Instead Of Buying Someone Else’s House

By Bruce Reichstein

If you want to build your home from the ground up on your own lot, you have plenty of options, starting with a choice between a construction loan with two applications, two loans, and two closing dates and a loan that only has a single application, one loan, and one closing date. The loans that require only one application and closing date are known as One-Time Close construction mortgages. They are also known as construction-to-permanent mortgages. The loans that require two of everything are simply known as construction-only loans and you must apply for the mortgage loan separately from the construction loan. What are the basic benefits of choosing a One-Time Close loan aside from the obvious? Your ability to have single loan approval and one closing date are important. | more...

May 19, 2022

Appraisals, Home Inspection, And The Systems Of Your House

By Joe Wallace

We write a great deal about not using the FHA appraisal to determine the condition of the home you want to buy with an FHA mortgage. But why do we say this? Why can’t you trust the appraisal alone? Why pay for the home inspection? There are important reasons for homebuyers to pay for a home inspection as well as the appraisal. Here are some things you should think about before you decide to skip a home inspection. The Foundation of Your Potential New Home Your FHA appraiser is not required to be an expert in areas such as the foundation of the home. Some foundation problems may not be apparent in the appraisal process. They may only be revealed during a home inspection depending on the problem. The appraiser | more...

May 18, 2022

Home Loans And Credit: Facts And Fiction

By Joe Wallace

Are you worried about your ability to pass a credit check for a home loan? Some borrowers may be justified in their concerns, especially after recent pandemic-related financial setbacks or interruptions in employment. Sometimes borrowers are misinformed about their chances of being approved for a mortgage–it’s never a good idea to assume you cannot qualify even if you’re concerned about past credit issues. What do you need to know to move forward? FHA Loan Credit Check Facts: FHA Mortgages Have Lower FICO Score Requirements FHA loan rules in HUD 4000.1 say that applicants with FICO scores of 580 or higher technically qualify for an FHA mortgage. But you’ll need to discuss your scores with a participating lender since lender standards may apply above and beyond the FHA minimum. FHA Loan | more...

May 16, 2022

Why Choose An FHA Mortgage?

By Joe Wallace

Why do some borrowers choose FHA mortgages when conventional loans, VA mortgages, and even USDA home loans are also options to consider? In some cases the answer is easy to understand; the FHA 3.5% down payment minimum is attractive to borrowers who worry they might not be able to qualify for a conventional loan or can’t afford a higher down payment. But FHA mortgages aren’t just for those who want a lower down payment. Some may choose an FHA home loan for their ability to be refinanced later with an FHA Streamline Refinance Loan, which typically must result in a benefit to the borrower such as a lower mortgage rate or lower monthly payments. How do FHA mortgages compare to their non-FHA counterparts? When you compare the FHA loan program | more...

May 12, 2022

FHA Rehab Loans And Remodeling Projects

By Joe Wallace

If you are interested in an FHA 203(k) Rehabilitation Loan to buy and renovate a home or want to use the refinance version of the FHA 203(k) Rehab Loan, there are some things you should know before committing to a renovation project. That’s especially important for those who want to refinance their existing mortgage into an FHA 203(k) and use the loan funds to improve the home they already own. Why? Because it’s easy to get the wrong idea about how much value certain renovations might add to your property. For example, some might believe that adding a pool or hot tub will increase the value of their property. Never mind that FHA 203(k) Rehab loans don’t permit such luxury items, it’s the misconception that’s most important here. Why is | more...