Articles Tagged With: FHA Loans

February 2, 2017

FHA Mortgage Facts You Should Know

FHA mortgage loans are a very good option for borrowers looking for a lower down payment and less stringent credit requirements than conventional mortgages. Did you know that FHA home loans do not feature a minimum or maximum income requirement? A borrower’s ability to qualify for an FHA mortgage depends on FICO scores, debt-to-income ratios, credit history, and other factors but there’s no “qualifying dollar amount” for income in terms of minimums OR maximums. Some believe that FHA mortgages are only for first time home buyers, the economically disadvantaged, or only for typical suburban homes. But FHA home loans are available to anyone who is financially qualified and wants to use the property to be purchased as their primary residence. FHA mortgages require only a 3.5% down payment in typical | more...

February 1, 2017

FHA Refinancing: Your Options

By Joe Wallace

There are many reasons to consider an FHA refinancing loan. Some borrowers want to refinance out of an adjustable rate mortgage, others want to refinance out of a more expensive conventional mortgage, while others still want to take out some of the cash value in their home. Do you know what your FHA refinancing loan options are? According to HUD 4000.1, the rule book for all FHA single-family mortgages, there are a variety of options: 1. No cash-out refinances of FHA-insured and non FHA-insured Mortgages. This type of FHA refinancing is meant to pay off existing liens. These include: Rate and Term refinance, Simple Refinance, and Streamline Refinance. 2. Cash-out refinances. 3. Refinances of non FHA-insured Mortgages are available for qualified Borrowers in negative equity positions (Short Refi). 4. Refinances | more...

What You Need To Know About Your FHA Home Loan

February 1, 2017

FHA Loan Rules: Who Can Sell You The Home?

By Joe Wallace

FHA requirements and FHA loan rules are designed to protect the lender in some cases, the borrower in others, and sometimes both at the same time. The FHA appraisal process, for example, is designed to insure that the home will be viable for the entire lifetime of the mortgage. That protects the bank’s investment and the borrower’s ability to refinance or sell the property later. One set of FHA loan rules that seems to a have a definite consumer-friendly intent has to do with who is eligible to sell you the home you want to buy with an FHA loan. HUD 4000.1, the FHA single family home loan rule book, has a section that outlines basic requirements for FHA mortgages. Those requirements include controls on who may sell you the | more...

Can I get an FHA home loan if I owe back taxes?

January 31, 2017

Eligibility Rules For FHA Loans

By Joe Wallace

Eligibility rules for FHA loans are found in HUD 4000.1, which addresses who is permitted to apply for an FHA single-family home loans. Who can apply for an FHA loan and what do the rules say about these applicants? The most basic eligibility rules for FHA loans include the requirement that the borrower be an owner-occupier of the property to be purchased. FHA loan rules do not permit FHA single family home loans to be used for investment properties, so the borrower who wishes to buy a multi-unit property and rent out all of those units to other people would not be approved for the mortgage. The same is true of those who wish to purchase time shares, condo hotels, or other “transient occupancy” or short-duration occupancy properties. That said, | more...

Will My Home Loan Application Be Approved?

January 27, 2017

Identity of Interest Transactions: An FHA Loan Question

By Joe Wallace

Do you know how FHA loan rules affect the sale of a home deemed an “identity of interest” transaction? A reader asks, “My husband and I have a contract to purchase his parents home that they currently live in. This is their principal residence.” “My loan officer is telling me that even though it is their principal residence and we are purchasing as our principal residence that the 85% LTV cannot be exceeded and we have to put 15% down. Is this correct?? If not, then what can I do to get them to make the exception? We were already pre-approved for 3.5% down.” FHA loan rules governing identity-of-interest transactions do feature a higher down payment requirement in many cases. HUD 4000.1 defines such transactions as follows: “An Identity-of-Interest Transaction | more...

January 26, 2017

FHA Loan Rules For Gift Funds

By Joe Wallace

FHA loan rules in HUD 4000.1 have specific guidelines where gift funds to the borrower are concerned. Gift funds are commonly used for home loan expenses including down payments, but when the borrower accepts gift funds for the purpose of making that down payment, the funds must meet FHA acceptability standards. What does this mean? FHA loan rules are very precise when it comes to the source of money used for a down payment. A borrower cannot use proceeds from a non-collateralized loan such as a payday loan or credit card cash advance to make a down payment, and if gift funds are used the money must come to the borrower with no obligations. HUD 4000.1 has the guidelines for these gifts, which includes the following definition: “Gifts refer to | more...

January 26, 2017

FHA Loans and Credit Report Issues

By Joe Wallace

FHA home loans offer an alternative to the more strict requirements of conventional mortgages. FHA loans typically feature a lower down payment requirement than many conventional loans, and have more forgiving credit standards (though lender standards will still apply). Some apply for an FHA mortgage unsure of how their past credit activity or even their current FICO score might affect their chances at loan approval. If you are one of those people, there are some things you can do for greater peace of mind going into the loan process. The catch is that advance planning is required-it’s best to start preparing for a major financial commitment like a mortgage a full year or more before applying. The planning time is crucial since you will need to save up money for | more...

January 25, 2017

Appraisal Questions: Bricks

By Joe Wallace

A reader asked a question about the FHA appraisal process in our comments section recently; “I am currently selling my house. The buyer is getting a FHA loan.” “The appraiser asked us to repair any broken brick on the outside of the house. My husband scraped off the parts of the bricks falling apart and filled each hole with mortar and painted it as close to the brick as he could. Will this be an acceptable fix according to the appraiser?” When an FHA appraiser requires corrections as a condition of loan approval, borrowers will likely have to pay for an additional compliance inspection, which allows the appraiser to verify that the corrections were made to the satisfaction of FHA minimum standards. Whether or not a certain correction or repair | more...

January 24, 2017

Mortgage Rate Trends: Sharply Improved

By Joe Wallace

You may have noticed some extra coverage of mortgage rate trends in the last few weeks; rates have moved up and down in ways that seem to insist on added coverage, and Monday’s mortgage rate activity was definitely that. Rates recovered ground lost in the previous week and part of the reasons for that are also the reasons we saw higher rates in our last report; there is still a great deal of uncertainty among the markets and investors when it comes to economic policy, how the new administration will deal with overseas trade and other important issues. Mortgage rate trends currently reflect this uncertainty. Investors reacted to the earliest activity from the new regime in Washington D.C. and those reactions helped push mortgage rates lower. We’re now seeing a | more...

January 23, 2017

FHA Announces Suspension Of Earlier Policy Changes

By Joe Wallace

Earlier in January 2017, we reported on changes in policy regarding FHA Mortgage Insurance Premiums. Mortgagee Letter 2017-01 announced revised, lower Mortgage Insurance Premiums, plus the elimination of the distinction in rates based on the base loan amount according to the mortgagee letter. However, a new mortgagee letter announces that this change has been suspended. “This Mortgagee Letter…communicates that Mortgagee Letter 2017-01, reducing Mortgage Insurance Premiums for loans with Closing/Disbursement date on or after January 27, 2017, has been suspended indefinitely. FHA will issue a subsequent Mortgagee Letter at a later date should this policy change.” It is unclear at the time of this writing whether the suspended policy will be revised, or eliminated completely, but we will report on any future developments. Borrowers with FHA loans that have closing/disbursement | more...