Articles Tagged With: FHA Mortgage Loans

When Is An FHA Loan Better Than A Conventional Loan?

November 18, 2015

HUD 4000.1 Minimum Property Standards: Encroachment, Power Lines, Property Access

The FHA loan rules in HUD 4000.1 include plenty of updates, changes, revisions, and restatements of FHA loan policy. The FHA didn’t provide a comparison from the old rules (HUD 4155.1 and HUD 4155.2) and the new, stating it was up to the end user to be aware of the new policies found in HUD 4000.1. That’s why we’re taking a look at some of the crucial areas of the FHA loan rules–to get a closer look at today’s rules and how they might affect your FHA loan transaction. FHA Minimum Property Requirements (MPRs) are a big part of the appraisal process as these requirements inform the appraiser’s work. We begin our examination of FHA MPRs with a look at a few of the basics. Encroachment HUD 4000.1 says, “The | more...

What you should know about FHA 203(h) Loans For Disaster Victims

November 18, 2015

FHA Appraisal Rules In HUD 4000.1: The Living Unit, Structural Conditions

By Joe Wallace

The FHA loan rules for minimum property standards in HUD 4000.1 include a section describing general requirements for “the living unit”. These instructions would be considered by the appraiser in addition to, but in replacement of, state and/or local building code. According to HUD 4000.1, “The Mortgagee must confirm that each living unit contains: –a continuing and sufficient supply of safe and potable water under adequate pressure and of appropriate quality for all household uses; –sanitary facilities and a safe method of sewage disposal. Every living unit must have at least one bathroom, which must include, at a minimum, a water closet, lavatory, and a bathtub or shower; –adequate space for healthful and comfortable living conditions; heating adequate for healthful and comfortable living conditions; –domestic hot water; and –electricity adequate | more...

November 5, 2015

More On FHA EEM Stretch Ratios And Home Energy Scores

By Joe Wallace

Recently we reported on the FHA’s coming rule modification for the Energy Efficient Mortgage program. For loans in 2016 with FHA case numbers assigned on or after January 25, 2016, homes with qualifying energy ratios could be eligible for increased “stretch ratios” as described below (reprinted from the FHA official site): “FHAs existing EEH policy allows stretch ratios for homes that are built or retrofitted to the 2000 International Energy Conservation Code (IECC). For standard FHA loans, debt-to-income (DTI) ratios are limited to 31 percent (front-end) and 43 percent (back-end). Under FHA policy for the EEH mortgage, these DTI ratios can be increased to 33 percent and 45 percent respectively. To increase opportunities for homeowners to achieve and benefit from an energy efficient home, FHA is adding a new threshold | more...

November 4, 2015

HUD 4000.1 On “Flipping”

By Joe Wallace

Ever since the publication of the new FHA single family home loan rule book, HUD 4000.1, have been examining loan rules as published in the new guide. One important area of the FHA single family loan rulebook involves the guidelines for buying property with an FHA mortgage that is being sold after having been recently acquired by the seller. HUD 4000.1 states that, in order for a home to be eligible for an FHA mortgage, a certain amount of time must elapse between the sale of the home to the new owner and the subsequent sale of the property to another buyer–this time requirement is known as the HUD “anti-flipping” rule. It states: “Property Flipping is indicative of a practice whereby recently acquired Property is resold for a considerable profit | more...

November 4, 2015

Mortgage Rate Trends: Moving Higher For A Second Day In A Row

By Joe Wallace

Last week, mortgage rates moved higher on Thursday, then leveled out and didn’t lose any more ground on Friday. But Monday and Tuesday we’ve seen the rates move to their highest numbers in four weeks or so, pushing best execution rates for 30-year fixed rate conventional mortgages farther away from that 3.75% zone we saw last month. 30-year fixed rate conventional mortgages have moved recently into a range between 3.875% and 4.0%; if upward pressure continues we could see 4.0% (best execution) become far more prevalent. At the time of this writing, FHA mortgage rates are still at their 3.5% best execution comfort zone but this time around that might not last as long as the previous FHA mortgage loan rate comfort zone–we’re likely to see rates break out into | more...

November 3, 2015

FHA Energy Efficient Mortgages: New Standards For 2016

By Joe Wallace

In 2016, FHA borrowers looking to add Energy Efficient Mortgage loans to their transaction will have some new standards to use related to the energy efficient improvements they wish to add. Thanks to a new partnership between the FHA, HUD, and the Department of Energy, certain ratios will be increased in 2016, according to a press release found at the FHA official site. “FHAs existing EEH policy allows stretch ratios for homes that are built or retrofitted to the 2000 International Energy Conservation Code (IECC). For standard FHA loans, debt-to-income (DTI) ratios are limited to 31 percent (front-end) and 43 percent (back-end).” “Under FHA policy for the EEH mortgage, these DTI ratios can be increased to 33 percent and 45 percent respectively. To increase opportunities for homeowners to achieve and | more...

November 2, 2015

Mortgage Rate Trends: Moving Higher

By Joe Wallace

Thursday and Friday say mortgage rate moving higher, pushing close to four-week highs and some industry professionals and market watchers are sounding off about the higher rates potentially shifting into an upward momentum phase. Whether or not rates actually do that is dependent on a variety of factors that haven’t actually happened yet, so it’s unclear where rates could move during the week. Friday, 30-year fixed rate conventional mortgages moved into a best execution range between 3.875% and 4.0% depending on the lender. Some extremely well qualified borrowers who found lenders willing to offer lower rates may still have had access to something approaching 3.75% on Friday, but if upward pressure continues, it’s likely that best execution offering will disappear for the moment. FHA mortgage rates are still holding in | more...

October 29, 2015

Mortgage Rate Trends: Moving Higher Post-Fed

By Joe Wallace

The Fed announcement on Wednesday did not include a statement that interest rates would be raised, but mortgage loan rates pushed a bit higher yesterday regardless. There were indications from the Fed that December’s statement could include more specific information about a rate hike, and that served to put upward pressure on mortgage loan rates as investors reacted to those indications. Not everything the Fed says and does is clear cut–sometimes the tone of the announcements can be enough when it comes to whether or not a rate hike might happen–when the Fed is down on the economy in general, that’s a good sign that a hike in rates is not forthcoming. But when the Fed makes more positive statements, it can be interpreted as the foreshadowing of actions to | more...

October 23, 2015

HUD Proposes New Anti-Housing Discrimination Rule

By Joe Wallace

The Department of Housing and Urban Development has issued a press release about a proposed new rule that would create new, formal and standardized claims procedures for discrimination complaints in connection with housing transactions. HUDNo.15-136 was released Wednesday, October 21, 2015, stating, “The U.S. Department of Housing and Urban Development announced today that it is issuing a proposed rule that would formalize standards for victims of harassment in housing to bring claims under the Fair Housing Act.” HUD’s proposed rule, called Quid Pro Quo and Hostile Environment Harassment and Liability for Discriminatory Housing Practices under the Fair Housing Act, was published in the Federal Register and is open to comments by the public for a limited time. “A home should be a refuge where every woman and man deserves to | more...

October 22, 2015

FHA Loan Rules For Income: Part Time Employment

By Joe Wallace

The new FHA single family home loan program policy handbook, HUD 4000.1, has a section on income verification rules that includes instructions to the lender on how to include part-time income in the FHA loan applicant’s debt-to-income ratio. HUD 4000.1 makes an important distinction between full-time income and part-time earnings, and borrowers need to understand how FHA loan rules make the distinction. When it comes to full-time work, HUD 4000.1 Part II Section A states: “Primary Employment is the Borrowers principal employment, unless the income falls within a specific category identified below. Primary employment is generally full-time employment and may be either salaried or hourly.” For part-time income, the rules say: “Part-Time Employment refers to employment that is not the Borrowers primary employment and is generally performed for less than | more...