Articles Tagged With: FHA Mortgage Loans

May 4, 2016

Mortgage Rate Trends: Back to Previous Lows

Since our last look at mortgage loan interest rates (which were moving higher) we’ve seen stock market woes affect mortgage rates. As plenty of professionals will tell you, stocks don’t have a specific tie with mortgage rates, but investor reaction to woes of the market can and often do affect mortgage loan interest rates. So while you won’t see a reciprocal effect with stocks (better or worse stock performance directly changing mortgage loan interest rates) you may notices that under the right circumstances, the kind of behavior happening now. And that behavior is essentially, based on our sources, that stock market troubles this week are helping mortgage rates. 30-year fixed rate conventional mortgages have slid back down to 3.625% best execution, down from the range between 3.625% and 3.75%. FHA | more...

April 29, 2016

FHA Loan Questions: Minimum Income?

By Joe Wallace

Recently we were asked if FHA home loans have either an income limit, or a minimum amount the borrower must earn per month/year in order to qualify. FHA loan rules in HUD 4000.1 do not specify a maximum income. FHA loans are designed for those who want to purchase a home and want an alternative to conventional mortgages. FHA home loans are not created for a specific income bracket. Let’s examine the rules for income in HUD 4000.1: “The Mortgagee must document the Borrowers income and employment history, verify the accuracy of the amounts of income being reported, and determine if the income can be considered as Effective Income…” “…The Mortgagee may only consider income if it is legally derived and, when required, properly reported as income on the Borrowers | more...

When Is An FHA Loan Better Than A Conventional Loan?

April 26, 2016

FHA Loans and Borrower Debt: Recent Credit Applications

By Joe Wallace

When applying for an FHA mortgage, like any home loan, a borrower’s debt-to-income ratio will be an important factor in loan approval. The lender needs to know that the borrower can afford both monthly financial obligations as they exist at application time, and those financial commitments plus the amount of the monthly mortgage payment. For that reason, the lender will examine a borrower’s existing debt and compare it with verifiable income to see what percentage of the applicant’s income is taken up by bill payments each month. But what about a borrower’s potential future debt? Lenders have access to the borrower’s credit reports, and that access is used to see what current FICO scores are plus the applicant’s credit history. One thing that shows up on your credit history? Credit | more...

Can I buy a manufactured home with an FHA loan?

April 21, 2016

FHA Loan Rules and Individual Lender Standards

By Joe Wallace

A recent question in the comments section reminds us of the need to differentiate between lender standards and FHA loan rules. Both will have a say in loan approval, terms and conditions, and more. The reader asks, “I was just in bank office today and yesterday. Yesterday before the lender saw my pay stubs i was pre-qualified for 70,000, now after seeing my work hours plus my W2. I’m now approved for only 30,000. How did that happen? I lost 40,000 just by not having 80 hours a week.” There are several issues at work here. The first is the nature of being pre-qualified for a mortgage loan. When you pre-qualify, your lender is giving you an estimate of what you may be able to borrow based on some initial | more...

April 13, 2016

FHA Mortgage Rate Trends: Holding Steady

By Joe Wallace

Mortgage rates held steady on Tuesday, ahead of Wednesday’s Retail Sales Report and Thursday’s Consumer Prince Index report. These scheduled economic data releases can and do affect mortgage rates depending on investor reaction to the data in the reports; borrowers who are hoping for lower rates this week will have to contend with these releases as a potential spoiler for rates moving lower in the short term. Mortgage rates seem to be at the bottom of a range at present, so holding steady is good news, but upward movement (however small) is always likely depending on scheduled economic data releases, breaking news, or other factors that may affect the markets that influence mortgage loan rates. At the time of this writing, 30-year fixed rate conventional mortgages held steady at between | more...

April 12, 2016

FHA Loans And Your Debt-To-Income Ratio: What You Should Know

By Joe Wallace

A borrower’s debt-to-income ratio or DTI is an important calculation the lender must make when processing an FHA home loan application. Your monthly debts, compared to your lender-verified income, will help determine your acceptability as a credit risk and your ability to pay your mortgage. But how does the lender process your debt information to arrive at the ratio? HUD 4000.1 establishes guidelines for the lender to follow in order to establish the borrower’s DTI. On pages 249 and 250 we find the following: “The Mortgagee must determine the Borrowers monthly liabilities by reviewing all debts listed on the credit report, URLA, and required documentation. All applicable monthly liabilities must be included in the qualifying ratio.” Some types of debt may be omitted by the lender in certain cases. For | more...

April 4, 2016

Mortgage Rate Trends: Decisively Lower After Jobs Report

By Joe Wallace

Friday, much attention was on the Employment Situation Report, which has in the past influenced mortgage rates based on investor reaction to the information in that report. Ahead of that report, it seemed risky to float, or delay making an interest rate lock commitment with a lender in hopes of seeing rate move lower. Floating is never risk-free, and ahead of a scheduled economic data release such as this, an elevated risk is present. But on Friday those who chose to float in spite of the risk were rewarded as rates moved lower. 30-year fixed rate conventional mortgage loan interest rates were reported at a best-execution 3.625% on Friday, ditching the previous range between 3.625% and 3.75%. FHA mortgage loan rates have not moved out of their recent comfort zone | more...

March 28, 2016

FHA Loan Questions: Student Loan Debt

By Joe Wallace

We get many questions about FHA loans in the comments section. Recently we’ve fielded several queries about student loan debts and how they relate to FHA mortgage loan approval. Once reader asks, “What about student loans, that are ‘in school’, and not even due and payable? We tried to get the Income Based Repayment, from the servicer, and they told us the loans are not due payable yet, therefore they can not be calculated for the Income Based Repayment. That doesnt seem fair. The statement says they are not due for 5 years, and then an additional 6 months after I graduate.” FHA loan rules in HUD 4000.1 address student loans that have not yet come due as “deferred obligations” which page 180 of HUD 4000.1 describes as, “liabilities that | more...

March 23, 2016

FHA Loan Questions: Employment Gaps

By Joe Wallace

We get many comments and questions about FHA home loan rules in our comments section. Here’s one of the most recent. “I have some money saved up, however I have not been employed for 2.5 years. I would like FHA loan if possible. My main issue is all my money is cash and not in the bank, and I have NO employment history for the past 2 years.” Basically it seems that the reader is asking whether an FHA loan is possible without a job. This is a complex issue-FHA loans permit the lender to consider public assistance, for example, as income. The source of income must be verifiable by the lender and deemed likely to continue. However, in the case of this reader question, there is no income at | more...

March 4, 2016

Ordering a Second FHA Appraisal: The Rules in HUD 4000.1

By Joe Wallace

There are many questions about the FHA appraisal process–we get many in the comments section asking about the nuances of FHA appraisals. One typical question has to do with when a second appraisal is appropriate or permitted. Can a second FHA appraisal be ordered if the borrower or lender doesn’t agree with the outcome of the original? HUD 4000.1 spells out the rules for FHA appraisals including “second appraisal” requirements. They include the following: “The Mortgagee is prohibited from ordering an additional appraisal to achieve an increase in value for the Property and/or the elimination or reduction of deficiencies and/or repairs required. The Mortgagee may order a second appraisal for Mortgages that are in accordance with requirements on Property Flipping.” FHA policy, based on the reading above, is clear–you can’t | more...