Articles Tagged With: FHA Loans

December 7, 2022

Mandatory or Optional? FHA Home Loan Issues

What is mandatory and what is optional when you apply for an FHA home loan? You will find a lot of advice on the internet about buying a home. You can haggle over the home sale price, for example, and negotiate things like seller concessions. But what about the not-so-obvious details? What is required and what is not? Mortgage insurance on your FHA mortgage, for example, is mandatory. To a point. All FHA forward mortgages (also known as purchase loans) require you to pay for mortgage insurance on your FHA home loan each month. That said, it may not be mandatory for the full duration of the mortgage. That may depend on how much you put down and the term of the loan you may have the option to cancel | more...

December 2, 2022

Higher FHA Loan Limits For 2023

By Bruce Reichstein

On Thursday, December 1, 2022, the Federal Housing Administration published the new FHA loan limits for 2023. There are higher loan limits for FHA forward mortgages in 2023 and also higher limits for FHA Home Equity Conversion Mortgages. Most of the country gets this loan limit increase in 2023. The higher limits come thanks to house price appreciation during the first half of 2022. Such home price changes are typically included as part of the calculations FHA makes to set the limits” each new year. A press release at HUD.gov notes these limits, “reflect steep increases in home prices throughout much of the country” according to Assistant Secretary for Housing and Federal Housing Commissioner Julia Gordon, who was quoted in the press release. Commissioner Gordon adds the higher limits, “…will | more...

November 30, 2022

Budgeting For Your Home Inspection, Appraisal, and Compliance Inspection

By Joe Wallace

When you plan to buy a home with an FHA loan you should be thinking about how much you will need to save for expenses paid upfront, such as appraisals and inspections. You may not, as a first-time home buyer, have the experience to anticipate all expenses you need to pay in the coming months. But there are typical costs you can plan and save for. Home Inspection Costs Did you know there’s no fixed price for home inspections? There are no national cost guidelines or restrictions for this service; home inspection costs will vary based on the housing market and inspections are paid for by the borrower independently of the rest of the home loan process. Home inspections may cost somewhere between $300 and $500 depending on location. Your | more...

November 18, 2022

Buying A Home With An FHA Loan In 2023

By Joe Wallace

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...

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...