Articles Tagged With: FHA Loans

November 18, 2022

Buying A Home With An FHA Loan In 2023

The last weeks of the old year usually bring speculation about what the next year will bring, especially in terms of the economy and the real estate market. Housing market issues were a serious concern in 2022. In the wake of this year’s rising mortgage rates and house prices; what are finance blogs and market watchers saying about what’s next in 2023? Many finance websites report a general expectation that rates and house prices may improve in the new year. But the degree of that improvement is what’s at issue. Some feel big changes are coming (compared to current conditions) while others feel those gains could be more modest. The National Association of Realtors are on record saying 2023 may see mortgage rates hover between 6% and 7%. There will | more...

November 14, 2022

First-Time Home Buyers And FHA Loan Approval: New Rules

By Joe Wallace

The FHA and HUD made changes to home loan approval procedures aimed at helping first-time home buyers. These changes allow participating FHA lenders to use qualifying “positive rental payment history” in their loan approval process, but only for applicants meeting the FHA description of first-time home buyers. Borrowers who worry about their ability to be approved for a home loan may have an additional advantage using an FHA mortgage because of this. According to the HUD official site, rental data is not included in “most Tri-Merged Credit Reports or Residential Mortgage Credit Reports” which are used for FHA-insured loans. When the information IS available, it may be as separate documentation. The FHA has now updated loan approval processes and software so lenders may add positive rental information as a factor | more...

October 28, 2022

Buying A Home When Interest Rates Are High

By Joe Wallace

Are you considering your FHA home loan options? You aren’t alone if you’re considering the option of waiting to buy until mortgage rates drop from current highs. How high have the rates gone? In the closing days of October 2022, the New York Times reported interest rates hit the 7% range for the first time since 2002. Do you worry that such high rates are here to stay? You couldn’t be blamed for thinking it’s a safer bet to hold off on buying a home right now. The Fannie Mae Housing Forecast for 2022 includes the possibility that mortgage loan interest rates might settle into the four percent range sometime at or near the second quarter of 2023. If that becomes a reality, could we see an increase in interested | more...

October 19, 2022

FHA Home Loan Approval And Debt Ratios

By Joe Wallace

How is FHA home loan approval affected by your debt ratio? Your credit qualifications including FICO scores and credit history are very important factors in home loan approval, but the amount of debt you carry is also a factor. Your participating FHA lender must evaluate your monthly debt versus your monthly income to determine if you can realistically afford the mortgage. How does the lender do this? The rules governing this process are found in the FHA loan handbook, HUD 4000.1. It begins by stating that the lender is required to “determine the Borrower’s monthly liabilities by reviewing all debts listed on the credit report, Uniform Residential Loan Application (URLA), and required documentation”. The lender must review all monthly financial obligations but some things may not necessarily be included in | more...

October 7, 2022

FHA ARM Loans

By Joe Wallace

There are many types of different FHA loan products. You can apply for new purchase home loans, refinance loans, and even Home Equity Conversion Mortgage loans (HECM). But even with this variety of options to choose from, did you know you can apply for purchase or refinance loans guaranteed by the FHA that have adjustable interest rates? It’s true–the FHA Single-Family Home Loan program offers both fixed-rate mortgages and adjustable rate home loans. The FHA official site has an entire page dedicated to Adjustable Rate Mortgages (also known as ARM loans). Here’s how the FHA/HUD official site defines the ARM Loan: “An ARM is an Adjustable Rate Mortgage. Unlike fixed-rate mortgages that have an interest rate that remains the same for the life of the loan, the interest rate on | more...

September 21, 2022

Article Update: FHA Loan Rules For “Identity Of Interest” Transactions

By Joe Wallace

Back in 2016, we published an article about the specific FHA loan rules that apply in situations where the owner of a rental property wants to sell to her renters. In such cases, it may be a situation where the borrower has been renting for some time and has an offer from the landlord to purchase. Back when we first published the article, we noted that FHA loans do permit these transactions but there are special rules that govern them. Have those rules been modified since we reviewed them last? The rules for these transactions are found in HUD 4000.1, the FHA Single-Family Lender’s Handbook. Today, those rules begin by explaining who is affected in these circumstances, which are described by HUD as “identity of interest transactions”. From HUD 4000.1: | more...

September 19, 2022

Which Is Better: Conventional Mortgages Or FHA Home Loans?

By Bruce Reichstein

Which is better, a conventional mortgage or an FHA home loan? If you are struggling to make this choice, rising interest rates and home ownership costs might make you look twice at your upfront costs and other expenses associated with each type of mortgage loan. The more forgiving credit requirements and down payment expectations of an FHA mortgage may have you thinking twice about going conventional. When it comes to FICO scores, FHA loans on paper are easier to be approved for than conventional home loans. And while a conventional mortgage could be more affordable over the lifetime of the mortgage, those who need more flexible credit requirements and lower upfront costs may find the FHA mortgage worth considering. There are a few objections to FHA loans. Some are less | more...

September 9, 2022

Article Update: FHA Appraisal Refunds

By Joe Wallace

Back in 2012, we wrote an article discussing the FHA appraisal process, and whether it’s possible to get a refund from an appraiser if a property is not approved for an FHA mortgage or when the home’s appraised value comes back different than expected. When we addressed this question, which we are asked from time to time, the going advice was that in cases where a buyer disagrees with the outcome of the appraisal, the fee must still be paid. What’s the reality in 2022? When you find a house you want to buy with an FHA home loan, there must be an appraisal. This process is non-negotiable; the appraisal helps to determine the FHA loan amount which is based on the fair market value of the home, not necessarily | more...

September 7, 2022

Article Update: FHA Loan Rules On Late And Missed Payments

By Joe Wallace

Back in 2017, we published an article asking an important question. Is it possible to get an FHA loan application approved with late or missed payments on your credit report? Borrowers can get bogged down with financial difficulty in the best of times. In an economic environment that includes rising gas and utility costs, inflation, and employment woes this threat is greatly elevated. Back in 2017, we didn’t have the pandemic to worry about, but in more recent times this factor has severely complicated many people’s finances. If you get caught up in a struggle with common financial problems you may find some of the simplest situations–we are talking about late and missed payments on your recurring financial obligations–can have the biggest impact on a borrower’s credit rating or perceptions | more...

August 22, 2022

Article Update: FHA Loan Rules For Different Income Types

By Joe Wallace

Back in 2017, we published an article examining the FHA loan rules for income. As we noted back then, not every home loan applicant has the same type of employment, compensation, or schedule of compensation. That means a participating FHA lender must have rules that govern how/if certain types of income may be included for the purpose of determining a borrower’s monthly gross income. That information is needed to calculate the debt-to-income ratio your lender must have to help approve the loan. FHA Loan Rules For “Primary Employment” HUD 4000.1, the FHA Single-Family Lender’s Handbook, contains guidance for the lender to review hourly income, salary, and part-time income. The section that includes these guidelines states that the lender is responsible for examining earnings from the home loan applicant’s “primary employment” | more...