Articles Tagged With: FHA Loan Rules

July 16, 2015

FHA Loans And Federal Law

We’ve been discussing FHA loans, the Fair Housing act, and other federal laws lately. There have been many changes to applicable federal law in recent times that can and do directly affect the mortgage lending process. It’s no surprise that the FHA single family home loan program, being created by the federal government, would lead the way in pro-consumer regulatory changes and set the example when it comes to requiring equal treatment for all qualified borrowers. But some of the most important federal laws and regulations aren’t brand new–they’ve been around for quite some time. Some have been further modified to make them more inclusive. The Fair Housing Act now includes language that protects people regardless of their gender identity, family status, sexual orientation and much more. FHA loan rules | more...

July 16, 2015

FHA Loans And The Equal Credit Opportunity Act

By Joe Wallace

From time to time, we get reader questions asking whether certain types of income such as public assistance, alimony, or other types of payments might count for or against a borrower trying to apply for an FHA home loan. These are logical concerns; how many potential FHA borrowers might shy away from applying because they mistakenly believe that certain types of income such as public aid might actually count against them when it comes to loan approval? The rules that govern these issues are found in HUD 4155.2 Chapter One under a heading that discusses federal law known as the Equal Credit Opportunity Act or ECOA. Did you know that ECOA rules prohibit a lender from denying credit to a borrower simply because he or she receives public assistance? Chapter | more...

When Is An FHA Loan Better Than A Conventional Loan?

July 14, 2015

FHA Refinance Loans: With Appraisal Or Without Appraisal?

By Joe Wallace

For borrowers examining their refinance loan options, it’s important to know what kind of refinance loan you want so you can plan ahead for expenses that might be related to the loan such as appraisals and up-front closing costs. Some borrowers assume that certain types of refinancing never require an appraisal, but this is not true–FHA loan rules for Streamline Refinancing, for example, say that no appraisal is required by the FHA but the lender may ask for one regardless. This surprises some applicants, and we get a fair number of inquiries asking if certain lender policies (including “appraisal required” streamline loans) are legitimate. “My understanding is that the FHA rules don’t require an appraisal for this refinance loan. My lender says I will need one for my streamline refinance | more...

July 14, 2015

FHA Loans And Your Credit History: One Important Thing To Remember

By Joe Wallace

Are you planning to apply for an FHA home loan soon? There are many credit issues to consider when planning for your mortgage–avoiding new lines of credit before applying, eliminating lines of credit you no longer need or use, checking your FICO scores, etc. But there’s one easy-to-overlook thing all borrowers should do before applying for a new home loan: Review your payment history on all financial obligations. It is highly recommended that borrowers have 100% on-time payments on all bills 12 months prior to applying for a new home loan. That 12 month payment record will definitely be scrutinized by your lender and it’s a very important factor in loan approval. This is true in all cases, but it’s especially relevant for borrowers who have worries that their FICO | more...

July 11, 2015

FHA Loan Mortgage Interest Rate Trends: Moving Up

By Joe Wallace

FHA and conventional mortgage loan interest rates had a rocky week. On Friday rates moved higher for the second day in a row, which has erased the progress we had seen in the rates since investors started worrying about more significant stock market woes in China. Overseas economic developments can and do influence mortgage loan rates, but that influence can be fickle and subject to change. What looked dire a day or two ago (and gave some welcome downward movement in mortgage loan interest rates) is now suddenly no longer as much of a factor where FHA mortgage rates are concerned. 30-year fixed rate conventional mortgage loan interest rates had been flirting with the bottom of the four percent range, best execution. Now those rates are back up to a | more...

July 9, 2015

FHA Home Loan Closing Policies

By Joe Wallace

In a recent blog post, we discussed some of the rules for closing the deal on an FHA home loan. Did you know that FHA loan rules found in HUD 4155.2 cover specific aspects of the loan closing procedure including taxes, closing costs, and title issues? Chapter Six of HUD 4155.2 explains these policies. For example, in Chapter Six we learn that the lender is permitted to calculate–and collect–property tax payments under the right circumstances: “…The lender may project real estate tax payments, and collect those funds as a portion of the monthly escrow account payment without violating the Real Estate Settlement Procedures Act (RESPA). RESPA requires that a borrower receive an initial escrow account statement at settlement or within 45 days of settlement. In conducting this analysis, RESPA permits | more...

July 9, 2015

FHA Loans, Bankruptcy, and Short Sales

By Joe Wallace

There are many circumstances that can lead to bankruptcy and/or a short sale of the home. We get many reader questions about these scenarios. One recent question involves a married couple who were discharged bankruptcy three years ago, but are currently facing a short sale of their home. Does the couple qualify for a new FHA mortgage loan under such circumstances? There are many factors that could determine whether a lender is able to work with a borrower on a new FHA mortgage or not. One obvious one is credit rating and credit activity since the bankruptcy. Borrowers who have built up good credit since the discharge of the bankruptcy may find a lender willing to work with them–establishing reliable credit history after a “negative economic event” is one of | more...

July 8, 2015

FHA Loans and Foreclosure Avoidance

By Joe Wallace

FHA loan applicants don’t find a home, apply for the loan, and close the deal expecting to miss mortgage payments or get behind on their home loans. But the borrower who understands that it’s a possibility some time down the road and prepares for that contingency has a much better chance of making the best of the situation. Sometimes a little knowledge in advance of such problems can go a long way toward fixing them and making the entire experience easier to manage. Do you know what to do in case you fall behind on an FHA home loan? The FHA, HUD and the Consumer Financial Protection Bureau all have resources you should know about well in advance of any problems–knowing they are there will make the job of getting | more...

July 6, 2015

FHA Loans, Interest Rate Locks, and Lender Standards

By Joe Wallace

We recently got a reader question about FHA loan interest rate locks–the borrower signed a contract for an FHA loan at a certain interest rate, then was told later that the rate would be higher because the paperwork was signed after a certain point in the day when the interest rate lock had to be submitted in order to guarantee the rate. Does the borrower have any recourse? This is a tricky question to answer because at first glance, if two parties have signed a legally binding agreement, it stands to follow that one party cannot simply go back and change the terms of that agreement. To say that the borrower would not be eligible for the rate agreed upon in writing by both parties in the legally binding document | more...

July 3, 2015

FHA Loans And Borrower Debt

By Joe Wallace

Borrowers new to the FHA loan process have lots of questions. One we received recently involves debt-to-income ratios. A reader wanted to know if his credit report, having been newly cleared of a judgment, needed to also be free of other minor debt. The simple answer is that, no, the FHA loan program does not require a borrower to be completely free from debt in order to apply for a new home loan or refinance loan. But a borrower’s debt to income ratio will be examined to make sure the borrower can afford the loan. That ratio is very important and is one of the reasons why financial planners and home loan experts recommend examining your finances carefully at least a year before committing to a new home loan. Reducing | more...