Articles Tagged With: FHA Loan

How much can I borrow with an FHA refinance loan?

November 29, 2016

FHA Loans Closing Checklist

Borrowers who buy a home with an FHA loans or any other type of home loan, learn that their closing dates and other details become very important the closer the borrower comes to signing on the dotted line and taking possession of the home. To help borrowers manage all the details about closing, federal law requires the loan officer to provide a closing disclosure that details expenses, fees, and other information. The government’s watchdog agency, the Consumer Financial Protection Bureau (CFPB) at ConsumerFinance.gov says of this disclosure, “Lenders are required to provide your Closing Disclosure three business days before your scheduled closing. Use these days wisely”. The three day period before you close should be used to review your closing details-use it like a closing checklist to make sure everything | more...

November 28, 2016

The Debt To Income Ratio: FHA Rules In 2017

By Joe Wallace

If you are thinking about your FHA loan options in 2017, one area to pay special attention to (especially over the holidays) is your debt to income ratio (DTI). This ratio is one of the most important factors in the lender’s decision to approve or deny a home loan-it can be just as crucial as your FICO scores. The debt to income ratio is a calculation your lender will make by taking the amount of verifiable income you have and comparing it with the amount of your monthly financial obligations. This ratio is calculated with and without your proposed mortgage payment in order to determine if you can afford the loan payments every month. How does the lender make these calculations? According to HUD 4000.1, pages 177 and 178: “The | more...

November 23, 2016

FHA 203(k) Loan Rules: A Reader Question

By Joe Wallace

A reader asks, “I’m attempting to buy a mixed use residential/commercial property through an FHA 203(k) loan, and the building meets the size requirements. The commercial section is drywalled and spackled with plywood flooring. The residential section is in compliance, but the FHA appraiser listed a bunch of things needed in the commercial section, like a washroom, finished flooring, and baseboard.” “Where did they come up with this list? Is this a requirement for getting the loan? Ill have to make the seller do these things before the sale since I cant do any 203k work on the commercial section, so how do I know what is expected in the commercial section? The HUD doc says nothing on this.” FHA 203(k) loans are also known as “fixer-upper” loans, but even | more...

November 22, 2016

Mortgage Rate Trends: Pushing Higher

By Joe Wallace

Since our last report on mortgage rates, we’ve seen rates climb to highs not seen in well over a year. The markets that influence mortgage loan interest rates are reacting to economic uncertainty-specifically the unknowns related to fiscal policy for the incoming administration in Washington. Markets don’t like uncertainty, and current investor behavior is putting upward pressure on mortgage rates overall. 30-year fixed rate conventional mortgages are, at the time of this writing, reported at a best execution range between 4% and 4.125%. FHA mortgage rates are in their own best execution range between 3.75% and 4%. We haven’t seen rates break into the four percent zone in a very long time, and market watchers speculate that it will take a big dramatic shift to get back into the three | more...

November 18, 2016

FHA Appraisal Rules: A Reader Question

By Joe Wallace

A reader asks, “Does the ‘no exposed wiring’ rule apply to an unfinished utility closet that has the furnace and water heater inside it? This is merely a smaller utility closet space that was never finished as it was never meant for any type of living area.” FHA loan appraisal rules in HUD 4000.1 include a set of instructions for the appraisal. Those instructions include a section that specifically addresses the electrical system of the home. In general this section tells the lender and appraiser about defective conditions which must be reported, including a variety of issues such as an electrical system that is not adequate to support the entire property. Those instructions also include the following: “The Appraiser must examine the electrical system to ensure that there is no | more...

November 17, 2016

FHA Loan Limits In 2017: The FHA Search Tool

By Joe Wallace

At the time of this writing, FHA loan limits for 2017 have not been published yet, but borrowers who need to know mortgage loan limits can look them up at the FHA official site. No matter whether you’re looking for loan limit information for the current year or for 2017, there is some important information to keep in mind. First, FHA loan limits in general are not uniform across the country. Loan limits vary depending on whether the market you’re buying in is considered a high-cost area or a market where costs are below national averages. When you are using the search tool on the FHA Mortgage Limits page on the FHA official site, you can look up the limits by state, county, or “Metropolitan Statistical Area”. Looking up multiple | more...

FHA One-Time Close Construction Loans In 2019

November 17, 2016

FHA Loan Rules: Deed-In-Lieu Of Foreclosure

By Joe Wallace

What are the FHA loan requirements for getting a new FHA loan after a deed-in-lieu of foreclosure? One reader got in touch with us recently to ask: “I completed a deed in lieu about three months ago. According to the government guidelines, how long do I have to wait before I can refinance or purchase a home?” The rules that govern FHA deed-in-lieu of foreclosure policy are found in HUD 4000.1, which state: “A Borrower is generally not eligible for a new FHA-insured Mortgage if the Borrower had a foreclosure or a DIL of foreclosure in the three-year period prior to the date of case number assignment. This three-year period begins on the date of the DIL or the date that the Borrower transferred ownership of the Property to the | more...

November 16, 2016

Mortgage Loan Interest Rate Trends: Sharply Higher

By Joe Wallace

Since the election, mortgage rates have been on the move, and this week has seen a sharp increase in rates that we haven’t experienced in some time. In fact, rates are the highest they’ve been all year. It’s unclear at this point whether this is a short term reaction to current events, or if this indicates a longer-term trend. 30-year fixed rate conventional mortgages did something they haven’t done in a very long time-they broke into the four percent range, with a best execution 4.0% for the most well-qualified borrowers. Rates have flirted with the bottom end of the four percent range in the recent past, but managed to stay below four percent for a very respectable length of time. FHA mortgage loan interest rates are now at a best-execution | more...

November 15, 2016

FHA Refinance Loans and HECM Reverse Mortgages

By Joe Wallace

There are two types of FHA loans borrowers should know about when considering their refinance loan options. One is a traditional cash-out or no cash-out refinance loan, and the other is a reverse mortgage, also known as an FHA HECM loan. HECM stands for Home Equity Conversion Mortgage. The standard refinance loan and FHA HECM options are very different and serve different needs, but depending on the borrower it may be good to be familiar with both. Typical FHA refinance loans involve situations where the borrower typically has an existing mortgage and applies for a new loan that pays off the original mortgage, creating a brand new monthly payment, loan term, etc. Depending on the terms of the loan cash back may or may not happen, but for cash-out refinancing | more...

November 8, 2016

Divorce and FHA Loan Applications

By Joe Wallace

FICO scores, debt-to-income ratios, and credit history aren’t the only things that can factor in when the lender is gathering data from your FHA mortgage loan application. Borrowers who are divorced may experience additional requests from the lender for paperwork or supporting documentation. We get questions about issues like these quite frequently. Here’s one recent example from the comments section: “Legally divorced in SC for close to seven years. There was no alimony, no children, and bills were split. The underwriters for an FHA re-finance are demanding a copy of the Separate Maintenance and Property agreement filed at the time of separation, a full year and a half before the divorce. I dont have a copy of it, so I have to either buy one online or miss a days | more...