Articles Tagged With: FHA Loan

December 16, 2016

HUD Adds New Housing Counseling Requirements

Housing counseling is an important resource for those who want to apply for a mortgage loan. When borrowers decide to start on the journey to home ownership, there can be many areas they are unsure about. That’s one reason why it can be helpful to contact the FHA directly at their toll-free number (1-800 CALL FHA) to request a referral to a local, HUD-approved housing counselor to get expert advice and help in areas related to budgeting for a mortgage payment, credit issues, the home loan process and more. In some cases, certain types of counseling are actually required as a condition of FHA loan approval; this is true for FHA Home Equity Conversion Mortgages (HECM), where all borrowers must attend counseling to insure they understand the nature of HECM | more...

How much can I borrow with an FHA refinance loan?

December 15, 2016

FHA Mortgages: Five Simple Things To Know

By Joe Wallace

If you are considering an FHA home loan, there are a few simple basics to keep in mind about your loan application that will help you in both the planning stages and the application stage of the loan. Did you know? 1. FHA mortgages require a down payment, but that down payment is lower than many conventional mortgages. FHA home loans require a down payment of 3.5%, but you may encounter conventional mortgage loan requirements as high as 20%. This is an important factor when trying to plan a budget for your new monthly mortgage payment. FHA mortgages have down payments calculated as a percentage of the adjusted price of the home. 2. FHA mortgages require an appraisal to calculate the fair market value of the property and to insure | more...

December 15, 2016

FHA Loan Basics: A Reader Question

By Joe Wallace

A reader asks, “I really don’t understand why i have to pay PMI and MIP. I had credit problems a bankruptcy in 2013 , it was recorded and its been almost 4 years and my score is 709 that the middle score i have hardly no debts, 6% of income. I was told I have to pay the MIP up front of 1.75% and also 240 PMI monthly with mortgage. That’s a little too much, is there a way out of this? I also did not want taxes and insurance added, I’m putting 3.5 percent down. My loan officer said I had to pay the insurance and add taxes to my loan.” It’s not entirely clear from this reader question whether the loan is an FHA mortgage or not, but | more...

December 14, 2016

Mortgage Insurance Premiums, Down Payments, And FHA Loans

By Joe Wallace

Some borrowers get confused about the FHA’s required mortgage insurance premium (MIP), the Up Front Mortgage Insurance Premium (UFMIP) required to be paid at closing or to be financed into the loan, and private mortgage insurance (PMI). The FHA loan rulebook says of UFMIP, “Most FHA mortgage insurance programs require the payment of UFMIP, which may be financed into the Mortgage. The UFMIP is not considered when calculating the area-based Nationwide Mortgage Limits and LTV limits.” UFMIP is considered a standard cost of an FHA mortgage loan and is a separate expense entirely from the down payment, also known as the minimum required investment. FHA loan rules, as stated above, do permit the financing of the UFMIP, but the amount must either be financed entirely into the loan or paid | more...

December 14, 2016

Family Leave And FHA Loans

By Joe Wallace

Family leave is an important issue for lenders trying to determine a borrower’s verifiable income, debt-to-income ratio, etc. We get many questions on this topic in the comments section, including this most recent query: “How does FHA treat income after family leave? Is an 8 month maternity leave considered a job gap?” The rules that govern gaps in employment, temporary leave, and related issues can be found in HUD 4000.1. Temporary leave such as maternity leave or disability leave is addressed, but first the FHA loan rule book defines what it considers to be “gaps in employment”: “For Borrowers with gaps in employment of six months or more (an extended absence), the Mortgagee may consider the Borrowers current income as Effective Income if it can verify and document that: -the | more...

December 12, 2016

Appraisal Issues: Wood Floors

By Joe Wallace

FHA appraisal topics have been very popular recently in our comments section. One reader asks, “I’m going to view a home that has a plywood floor in the basement. not sure if that will be acceptable by FHA guidelines. Is there somewhere I can access a list of what is unacceptable?” FHA appraisal requirements for forward and “reverse” mortgages (HECM loans) are found in HUD 4000.1, starting on Page 465. This handbook can be downloaded from the FHA official site at www.fha.gov. A quick scan of HUD 4000.1 doesn’t reveal a specific requirement for the nature or construction of wood flooring in basement areas, but that leads us to a very important point where issues like these are concerned. FHA appraisal rules are NOT the only guidelines that must be | more...

December 9, 2016

FHA Loans And Building Code Requirements

By Joe Wallace

FHA loan rules include minimum standards for the property to be purchased with an FHA mortgage, but state and local building code also has a say in whether a home is suitable. With that in mind, we examine a recent reader question in the comments section: “I am looking for a townhome with a FHA loan. One complex I have looked at years ago, it is a two bedroom with a loft, next to the loft was a very large storage room, no windows. The seller has turned this room into another bedroom? Electric and all. Should I even bother, for my state can not consider a bedroom a room with no windows? She can remove bed and make it a den? if was a conventional loan would not be | more...

December 7, 2016

FHA Loan Credit Issues: A Reader Question

By Joe Wallace

Credit issues-an important area to consider when planning for a new FHA mortgage. One reader asks, “I am in the process of settling with a credit card lender from an account that went bad several years ago. Basically I fell on hard times and stop paying it. I owe about 10k.” “However I with my lawyer they have agreed to accept 3400. My understanding is this will reflect on my credit is that this will report on my credit report as settled for less than full balance. How will this affect my chances of buying a home with an FHA loan? Note this credit card is from about 6 years ago. I have many other credit cards probably 7 or 8 that I have applied for since this default and | more...

What You Need To Know About Your FHA Home Loan

December 1, 2016

FHA Loan Applications in 2017: Are You Ready?

By Joe Wallace

For potential borrowers thinking of filling out FHA loan applications in 2017, there are a number of areas to think about as you prepare. Some potential borrowers are ahead of the curve when it comes to getting financially ready for a major loan application, while others may overlook important areas that need attention long before the loan paperwork is filled out. Do you know how ready you are to fill out that mortgage loan application? One question to ask yourself before the new year arrives is how long youve been planning and preparing for the new loan. Many financial experts advise taking at least a full year to save, budget and research the new loan. Why is research needed? In several ways, doing some research can help you decide what | more...

Will My Home Loan Application Be Approved?

November 30, 2016

2017 Home Loans: Is Your Holiday Spending A Factor For An FHA Loan?

By Joe Wallace

Holiday credit card use tends to spike, and those considering 2017 home loans should take this into account when planning for a new mortgage loan application. Your credit card debt affects your debt-to-income ratio, which the lender will calculate at application time. That ratio, called DTI for short, is a very important factor in home loan approval. For some borrowers, the amount of credit card debt, even holiday spending, isnt as much of a problem as timely payments. Some consumers are tempted at holiday time to skip payments in order to free up some much-needed cash, but a missed payment within 12 months of your FHA mortgage or refinance loan application is not a good thing. Financial experts recommend borrowers maintain on-time payments with no late or missed payments for | more...