Articles Tagged With: FHA Loan Rules

January 27, 2022

FHA Home Loan Approval Problems: New Credit Applications

You may have heard advice about seeking new credit while you are in the home loan process. Much of this advice is definitely applicable. Anyone who advises you NOT to apply for new credit once you have started your home loan journey is thinking with your best interests in mind, but what is it about this advice that makes it so critical? A lender doesn’t pull your credit reports just once during the home loan process and if your lender sees new information that potentially changes your ability to qualify for the mortgage it may be necessary to re-approve you for the loan. And that’s just the presence of new credit in your report. What about how a new line of credit potentially affects your debt-to-income ratio? When you apply | more...

January 26, 2022

FHA and HUD Expand REO Sales Options For Owner-Occupiers

By Joe Wallace

They are sometimes known as HUD homes, more formally as HUD real-estate owned homes–properties that were purchased with FHA mortgages that later fell into loan default and ultimately foreclosure. The FHA and HUD, in such cases, have a reimbursement program for the lender but the property itself reverts back to HUD upon foreclosure. The HUD official site states, “A HUD home is a 1-to-4 unit residential property acquired by HUD as a result of a foreclosure action on an FHA-insured mortgage. HUD becomes the property owner and offers it for sale to recover the loss on the foreclosure claim.” And now, thanks to a move by the FHA and HUD, there are expanded opportunities for borrowers who want to be owner-occupiers to bid on and purchase these HUD homes before | more...

January 25, 2022

FHA Loans: Do Appraisals Transfer When Switching Lenders?

By Bruce Reichstein

Sometimes a home loan goes smoothly from start to finish. Other times, it may not. In some cases, a borrower may choose not to purchase a particular home after all and continue looking. In others, a borrower may be happy with the home, but not so pleased with the lender. In situations where a borrower wants to switch lenders, is it possible to transfer an FHA appraisal to the new lender? This is a not-so-common question, but an important one for those who need to know. What does HUD 4000.1 have to say about appraisal transfers? Quite a bit, it turns out. From HUD 4000.1: “In cases where a Borrower has switched Mortgagees, the first Mortgagee must, at the Borrowers request, transfer the appraisal to the second Mortgagee within five | more...

January 19, 2022

Is A Second FHA Loan Possible?

By Joe Wallace

Is it possible for borrowers to apply for second FHA loans, resulting in paying on two mortgages at once? Here is a variation on a common reader question about this issue: “I relocated to another state over 400 miles away. Will I be able to get an FHA loan even though I still own my first home?” There’s no one single answer to a question like this. Aside from FHA loan rules, a borrower’s credit rating, loan repayment history, and debt-to-income ratio may all play a part in whether a lender is able to approve or deny an FHA loan. In cases like these, one of the most important factors would be (all other considerations aside) focused on the borrower’s debt-to-income ratio. With an existing mortgage payment, will the borrower | more...

January 18, 2022

Home Loan Myths: 20 Percent Down Payments

By Bruce Reichstein

Why do people still believe you MUST make a 20% downpayment on a home loan? Like other persistent home loan myths (including the one that holds that FHA mortgages are ONLY for first-time homebuyers), the 20% issue has been passed along to unsuspecting first-time home buyers for decades. What is the reality? FHA mortgages require 3.5% down at a minimum. That’s for borrowers who financially qualify with FHA and lender credit score requirements. FHA loan rules in HUD 4000.1, the FHA Single-Family Lender’s Handbook, says that 580 or better is the FHA standard. You will need to ask the lender you choose whether there are higher FICO score requirements with that financial institution. (There often are.) With conventional mortgages, 20% down is typically required for borrowers who want to avoid | more...

January 14, 2022

Advantages Of An FHA Cash-Out Refinance Loan

By Bruce Reichstein

Do you know the advantages of an FHA cash-out refinance loan? There are several, especially if you are considering an FHA loan to get money to renovate your existing home. FHA Cash-Out Refinancing Loans: Good For FHA and Non-FHA Mortgages FHA cash-out loans are for all mortgages, FHA, or not. You can refinance a USDA, VA, conventional, existing FHA loan, etc. The rules to qualify are the same no matter what kind of home loan you wish to refinance, and the longer you have been making mortgage payments, the better. FHA Cash-Out Refinance Loan Funds Are Not Restricted The uses you put your cash-out refinance money towards is not restricted; you can use your cash-out funds any way you see fit. That includes debt consolidation, vacations, and home repair. FHA Cash-Out | more...

January 12, 2022

Buying A Home: Credit Questions And More

By Joe Wallace

There are plenty of questions first-time buyers ask about home loans and the credit requirements you need to get the best deal on your FHA mortgage. Here are some common questions you should know the answers to: I Have Multiple Credit Scores. Which One Gets Used? One of the more potentially confusing things to a new borrower? FICO scores. Most consumers will have three FICO scores, they may not match, and the lender may choose your middle score as “the one”. In cases where you only have two FICO scores, the lower one may be used. If you worry about FICO scores, be sure to take early steps to raise the score before applying for the loan. Start as early as possible and work on raising your scores by paying | more...

January 11, 2022

HUD Announces Disaster Relief For Counties In Washington State

By Joe Wallace

The U.S. Department of Housing and Urban Development has announced federal disaster relief for certain counties in Washington State affected by natural disasters late in 2021. The following counties have been declared federal disaster areas: Clallam Skagit Whatcom That is in addition to federal disaster areas for the Lummi Nation, Nooksack Indian Tribe, and Quileute Tribe in Washington. The relief is intended to “supplement state, tribal, and local recovery efforts in the areas affected by flooding and mudslides” from November 13 to November 15 in 2021. If you live in any of the affected counties or tribal areas mentioned above, contact your loan officer immediately and ask your lender about the following relief and foreclosure prevention remedies for those with FHA mortgages: Immediate Foreclosure Relief In federal disaster areas, there | more...

January 5, 2022

FHA And HUD Announce Disaster Relief For Arkansas and Colorado

By Joe Wallace

The U.S. Department of Housing and Urban Development has announced federal disaster relief for portions of Arkansas and Colorado affected by natural disasters. In the case of the Arkansas declaration, the following counties are eligible for relief thanks to a Presidential major disaster area declaration: Craighead Jackson Mississippi Poinsett Woodruff These counties were hit by severe storms and tornadoes in December 2021. For the Colorado declaration, Boulder County has been declared a major disaster area due to wildfires that began in late December 2021 and into 2022. The declaration also means that FEMA funding is provided to the affected areas “on a cost-sharing basis for hazard mitigation measures”. If you live in any of the affected counties mentioned here, the following disaster relief options are available to you: Immediate Foreclosure | more...

January 4, 2022

Buying A Home With An FHA Loan In 2022

By Joe Wallace

Do you want to buy a home in 2022? FHA home loan limits are higher in the new year and there are many different options to choose from with the FHA Single-Family Home Loan program. FHA loans are a popular option for borrowers–especially those who may be newcomers to the job market, those with thin credit or non-traditional credit, etc. When researching your home loan options you will learn that some lenders in your housing market may be participating FHA lenders who may also offer other loan options. This is an advantage as you can compare that lender’s options carefully to make the most informed decision about your mortgage. FHA Loan Downpayments FHA loans feature lower downpayments than you might expect, especially if you have heard the myth that you | more...