Articles Tagged With: FHA Mortgage Loans

August 2, 2016

FHA Loan Questions About Seller Contributions

A reader asks, “What extra expenses does a seller pay for a FHA offer compared to a conventional offer when selling their home?” Seller contributions and their limits are covered in HUD 4000.1. It’s impossible to speculate what the differences might be between an FHA mortgage and a conventional mortgage as loan terms may vary from lender to lender. However, FHA loan rules are clear on this subject in terms of what is permitted and what is not. Seller contributions are known as “interested party contributions” in HUD 4000.1. These must be negotiated between borrower and seller, but the agreed-upon contributions must meet FHA standards. FHA loan rules are quite clear-there is a cap on the value of seller concessions. Page 220 of HUD 4000.1 states: “Interested Parties may contribute | more...

July 29, 2016

FHA Loan Questions: Appraisal Concerns

By Joe Wallace

A reader asks, “I am about to put my house on the market. But now I’m starting to worry about a crack on the basement floor that has been there since I bought the house, I never worried about the crack, its due to the house settling to one side years ago. Other than that the house is structurally sound and basement is very dry. I think the house dips about 3/4 inch. Is this something that would cause an inspection to fail?” There are several issues that can make questions like these difficult to answer. The first is to remind borrowers and sellers alike that an FHA appraisal is NOT an inspection, nor does passing the FHA appraisal process equal an FHA stamp of approval on a property that | more...

July 27, 2016

Mortgage Loan Interest Rate Trends: Highest In Four Weeks

By Joe Wallace

There have been many influences on lower mortgage rates as of late, and as the trend has shifted to a move higher, we’re seeing stateside economic data returning to a greater place of influence over rates than Brexit headlines. One good example? All eyes are turning to the Fed this week-nobody expects the Fed to make any earth-shattering pronouncements, but investor reaction to this week’s activity could well pressure rates higher depending on circumstances. In the shadow of a Fed policy announcement on Wednesday, mortgage rates pushed higher on Tuesday, putting 30-year conventional fixed rate loans more solidly in 3.5% best execution territory. FHA mortgage loan rates, at the time of this writing, are at a best execution 3.25%. As always, best execution rates assume ideal conditions. A borrowers FICO | more...

July 14, 2016

FHA Loans and Bankruptcy

By Joe Wallace

A Few Words About Bankruptcy from FHA.com on Vimeo. Some borrowers want to know how credit issues such as foreclosure, Chapter 7 bankruptcy, and Chapter 13 bankruptcy can affect their ability to get an FHA mortgage loan or refinance loan. While those who have been through such proceedings may have a better understanding of what happens to your credit, many who are facing the option of filing bankruptcy, going into loan default and foreclosure, or even doing a deed-in-lieu of foreclosure may not understand what’s at stake. The video above explains some basics about bankruptcy. But how does bankruptcy in particular affect your ability to get an FHA loan? Like foreclosure and deed-in-lieu, filing bankruptcy usually requires a mandatory “seasoning period” or waiting time between the bankruptcy and the new | more...

July 8, 2016

FHA Loans Versus Conventional Loans

By Joe Wallace

Here’s the Scoop on Conventional Loans from FHA.com on Vimeo. What are the differences between FHA home loans and conventional loans? There are several, some features of mortgage loans can vary depending on the lender, and state law may also affect how your home loan is handled depending on circumstances, but there are a few very important general differences to keep in mind when comparing FHA loans to conventional loans. The first difference is the basic nature of the loan itself. Conventional loans are not backed by the government, unlike FHA home loans where the FHA guarantees a portion of the loan to make it more attractive to the lender to issue credit. In the event that a borrower defaults on an FHA loan, the lender and the FHA have | more...

July 7, 2016

FHA Loan Terms

By Joe Wallace

Understanding Your Loan Term from FHA.com on Vimeo. How long is an FHA mortgage? The answer to that question depends on a variety of factors including the initial choice of fixed or adjustable rate mortgage, whether you plan to pay off the loan early or not, whether you plan to refinance, etc. The typical length of a fixed rate, new purchase FHA mortgage can be 15 or 30 years. If you are refinancing, other variables may apply. Choosing a loan term depends on the individual borrower’s specific needs and goals. You may wish to apply for a 15-year mortgage if you are interested in saving money over the lifetime of the loan; borrowers who choose 15-year mortgages will make higher monthly payments than those who choose 30-year loans, but the | more...

June 21, 2016

More On FHA Adjustable Rate Mortgages

By Joe Wallace

In a previous blog post we discussed FHA adjustable rate mortgage loans and looked at some aspects of how these loans work. FHA adjustable rate mortgages, also known as ARM loans or FHA ARM loans, feature an introductory rate that the borrower and lender will negotiate. This rate will expire at some point and the new rate will be calculated. The interest rate adjustments over the lifetime of the loan are regulated by an FHA requirement that includes a cap on the amount and severity of the rate changes. As we discussed in the last blog post, there are four components to an ARM loan you should know, which include the following: 1. index 2. margin 3. interest rate cap structure 4. initial interest rate period (also known as a | more...

May 31, 2016

FHA Loan Questions: The Good Neighbor Next Door Program

By Joe Wallace

A reader asked us a question recently in the comments section about the HUD Good Neighbor Next Door program. “I am a 13 year veteran Corrections Officer of the Maryland’s DCSCS and I wanted to inquire as to whether or not I qualified for the Good Neighbor Next Door Program.” The HUD Good Neighbor Next Door program is mentioned on the FHA/HUD official site, which states, “Law enforcement officers, pre-Kindergarten through 12th grade teachers, firefighters and emergency medical technicians can contribute to community revitalization while becoming homeowners through HUD’s Good Neighbor Next Door Sales Program. HUD offers a substantial incentive in the form of a discount of 50% from the list price of the home. In return you must commit to live in the property for 36 months as your | more...

May 19, 2016

FHA Proposes New Rule To Strengthen Reverse Mortgage Program

By Joe Wallace

The FHA has announced a new proposed rule intended to strengthen the Home Equity Conversion Mortgage (HECM) loan program. According to the FHA official site, the proposal would “codify several significant changes to FHAs Home Equity Conversion Mortgage program that were previously issued under the authority granted to HUD in the Housing and Economic Recovery Act of 2008 and the Reverse Mortgage Stabilization Act of 2013, and to make additional regulatory changes”. A press release at FHA.com states the new rule would, once approved, “make certain FHA-insured reverse mortgages remain a viable and sustainable resource for senior homeowners hoping to remain in their homes and age in place.” The agency has spent the last two years working on reforms intended to improve the FHA HECM program. “We’ve gone to great | more...

May 10, 2016

FHA Loan Appraisal Requirements and State/Local Code

By Joe Wallace

Recently we received a question in the comments section about FHA requirements for homes served by wells. The reader want to know if a “shallow well” was permitted. FHA loan rules do address an aspect of this reader question, stating that for existing construction the well must deliver a specified amount of water: “Existing wells must deliver water flow of three to five gallons per minute”. For new construction, FHA loan requirements state, “Wells must deliver water flow of five gallons per minute over at least a four-hour period”. But one thing that is very important to keep in mind is that for well water and many other appraisal issues including electrical systems, septic, plumbing and many other features, FHA requirements are not the only ones that must be observed. | more...