Articles Tagged With: FHA Loan

September 21, 2016

FHA Loan Questions: FHA Lenders

A reader asks, “Do you have a local list of approved FHA lenders for first time home owners in the amount of $50,000.00 and lower?” This is a common type of question; we get asked this sort of thing quite frequently in the comments section. There are a variety of reasons why a borrower might wish to apply for a comparatively low-dollar amount FHA loan. One is that some housing markets simply don’t have the higher prices; another is that a borrower wishes to purchase a mobile or manufactured home rather than what’s known as “stick-built” housing which is built on-site. What’s important to know is that lender standards vary from place to place. What’s offered by one lender may not be offered by another. With that in mind, it’ | more...

September 21, 2016

Interest Rate Trends: Higher Ahead Of Fed

By Joe Wallace

Mortgage loan interest rates moved a bit higher on Tuesday ahead of Wednesday’s scheduled Fed announcement, which can and has influenced mortgage rates (depending on investor reaction to the contents of such announcements). Most likely borrowers affected by today’s increase will notice the changes in the form of closing costs, and today’s move is essentially a trend we’ve been watching in the short term. 30-year fixed rate conventional mortgages are reported at the time of this writing at or near a best-execution 3.5%. FHA mortgage loan rates are holding, best execution, at 3.25%, having given up a previous range between 3.0% and 3.25% earlier. As always, the rates you see listed here are best execution rates, which means an ideal borrower is assumed (with outstanding FICO scores, credit history, and | more...

September 20, 2016

Down Payment Rules For FHA Loans

By Joe Wallace

FHA home loans differ from conventional mortgages in many ways, and one of those ways is that a lower down payment is required with FHA mortgages than for many conventional loans. A conventional mortgage may require a down payment of ten percent or more, depending on the borrower’s financial qualifications and other factors. But the FHA loan minimum down payment is (in most cases) 3.5% of the adjusted value of the property. But there are specific rules governing the down payment for mortgage loans, and FHA mortgages are no exception. The borrower’s “minimum required investment” or MRI (as HUD 4000.1 describes the down payment) must come from approved sources. Those sources can include a borrower’s own funds, gift funds that meet FHA requirements, cashed-out investments, proceeds from retirement accounts that | more...

September 19, 2016

FHA Mortgage Loan Rules: Business Debt

By Joe Wallace

When your loan officer reviews your financial details in order to make sure you are a good credit risk for a mortgage loan, there are many factors to consider. Some borrowers have less debt than others, and some debts are not necessarily personal loans, personal credit cards, etc. Sometimes business debt can factor into the equation. FHA loan rules for calculating certain types of business debt into a borrower’s debt to income ratio are found in HUD 4000.1, which begins on page 185 with a definition: “Business Debt in Borrowers Name refers to liabilities reported on the Borrowers personal credit report, but payment for the debt is attributed to the Borrowers business.” The basic instructions to the lender here are fairly simple: “When business debt is reported on the Borrowers | more...

September 19, 2016

Interest Rate Trends: Unchanged To Slightly Higher

By Joe Wallace

Mortgage rates closed out unchanged for some, higher for others, depending on the lender. After some steady upward pressure on rates, we’ve seen both conventional and FHA mortgage loan interest rates affected ahead of an important week for rates with the Fed about to make another policy announcement, plus the release of housing data. The Fed meeting comes Wednesday and has had the power to influence loan rates in the past depending on investor reaction. There is strong potential for higher rates depending on what happens on Wednesday, so it’s best to assume that can and will happen and plan accordingly. On Friday, 30-year fixed rate conventional mortgages were reported at or near 3.5% best execution, with FHA mortgage loan rates reported at or near a best execution 3.25%. That | more...

September 15, 2016

More On The FHA Limited 203(k) Rehab Loan

By Joe Wallace

Recently we wrote about the FHA 203(k) rehab loan and the FHA 203(k) limited rehab loan. With the “standard” rehab loan, borrowers can make major improvements to a property with a minimum of $5,000 required. The limited version of the FHA 203(k) rehab loan differs in several ways, but to start with there is no minimum dollar amount for the loan. HUD 4000.1 has rules that apply to the FHA requirements for 203(k) limited rehab loan. Those include a list of ineligible projects for the limited version of this type of mortgage loan: “The Limited 203(k) mortgage proceeds may not be used to finance major rehabilitation or major remodeling. FHA considers a repair to be major when any of the following are applicable: -the repair or improvements are expected to | more...

September 14, 2016

FHA 203(k) Rehab Loan Options

By Joe Wallace

The FHA has a program that allows borrowers to apply for a mortgage loan in order to improve a property. The FHA 203(k) rehab loan is intended for borrowers who want to buy or refinance property and repair them, but not all borrowers have big rehab projects or work that requires a huge sum of money. What are the FHA 203(k) options for borrowers? There are two different types of 203(k) loans-the typical version is available, but there is also a “limited” 203(k) for projects that require a smaller amount of funds. The FHA official site describes the limited 203(k) as follows: “FHA’s Limited 203(k) program permits homebuyers and homeowners to finance up to $35,000 into their mortgage to repair, improve, or upgrade their home. Homebuyers and homeowners can quickly | more...

What You Need To Know About Your FHA Home Loan

September 13, 2016

FHA Loan Reader Questions: “Identity of Interest” And Below-Market Rents

By Joe Wallace

A reader asks, “My wife and I have resided in a three family home for 29 years. We have paid significantly below market rate rent for all these years because 1) initial elderly landlords just wanted good tenants and they liked us, 2) we looked after the elderly landlord after her husband died for many years and 3) the current owner was always appreciative for what we did for her mother (landlord has since passed and property is in Family Trust, their daughter is the trustee).” “She put the property up for sale and we submitted the winning bid. Now, two weeks before closing, the underwriter has said that because we paid less than market value for all those years that now we have an Identity of Interest and required | more...

How much can I borrow with an FHA refinance loan?

September 12, 2016

FHA Loan FICO Score Rules: What You Should Know

By Joe Wallace

What does it take to get approved for an FHA mortgage? There are a variety of factors that go into mortgage loan approval, and the borrower’s FICO score is just one of those factors. However, your credit report and credit score are an important ones and there can be confusion over how this score is reviewed. What do FHA loan rules tell the lender about FICO scores? HUD 4000.1 instructs the lender about reviewing credit scores, and since a borrower can have three different FICO scores, this is an important part of the rules to be aware of; how does the lender proceed when reviewing more than one credit score? Let’s examine what HUD 4000.1 says on this issue, starting with a definition. All three of a borrower’s credit scores | more...

September 12, 2016

Mortgage Loan Interest Rate Trends: 60-Day Highs

By Joe Wallace

Mortgage rates turned up sharply on Friday after a press conference by the European Central Bank (ECB). There is speculation among market watchers that Friday could be the beginnings of an upward trend in rates, but the talk at the time of this writing is just that-speculation. However, even though past performance does not guarantee future results (especially where markets are concerned) it may be wise to consider the advice of the market watcher for now-we simply can’t predict which way markets might swing next in a post-Brexit climate that includes both the Fed and ECB talking about the future of monetary policy with regards to interest rates, etc. While it’s true that best execution rates for 30-year fixed rate conventional mortgages look the same on paper at the time | more...