Articles Tagged With: FHA Refi

January 28, 2015

FHA Loans, Co-Signing, and Student Loan Debt: A Reader Question

A reader asks, “I co signed for a student loan for my daughter who has 2 1/2 years left of schooling. This puts her at around 3 years out before needing to start making payments on this debt. i’m looking to get pre approved for a mortgage in the next 6 months. Does the loan, being 3 years out before repayment begins act negatively towards a FHA loan approval?” FHA loan rules do include scrutiny of any debt the borrower may be liable to repay as a co-signer, but individual lender standards may vary. However, the timing of the student loan debt in this case may play a positive role. Let’s look at what HUD 4155.1 says about student loan debt in general in connection with an FHA loan application. | more...

January 28, 2015

Chapter 13 Bankruptcy and FHA Refinance Loans: A Reader Question

By Joe Wallace

A reader asks, “Is It possible to refinance while in chapter 13 for a lower rate. We Don’t qualify for the government HARP program.” FHA loan rules for getting new loans when it comes to bankruptcy allow the lender to exercise some discretion depending on circumstances, but depending on the type of bankruptcy a borrower may also need the court’s permission to apply. Borrowers in Chapter 13 bankruptcy have some options according to HUD 4155.1 Chapter Four Section C which states: “A Chapter 13 bankruptcy does not disqualify a borrower from obtaining an FHA-insured mortgage, provided that the lender documents that –one year of the pay-out period under the bankruptcy has elapsed –the borrower’s payment performance has been satisfactory and all required payments have been made on time, and –the | more...

December 11, 2014

FHA Appraisals: A Reader Question

By Joe Wallace

A reader asks, “I had moved out of my home while renovations were done to my property prior to getting an FHA re-fi I had an FHA appraisal done immediately after the repairs were completed.”” “However now the lenders says that because the property was vacant when the appraisal was done it appears that no one lives there and therefore they are not allowed to do a re-fi for this property and to compound the problem I have been told that every lender subsequent to this lender will say the same thing. Is this true?” It’s impossible to speak for all lenders–policies may vary from one financial institution to another. However, one thing to keep in mind is that FHA appraisals do have an expiration date and once that expiration | more...

December 8, 2014

FHA Loan FICO Score Mininums and Late Payments: A Reader Question

By Joe Wallace

A reader asks, “We were living in Florida when the housing market crashed. I was in school and my husband was working. 2 mos after starting school my husband lost his job so we had no other option then to file bankruptcy and we tried 9 times to get our mortgage modified with [lender name deleted] and they NEVER helped us! after eight mos of trying to get a modification, we were served foreclosure papers. Our Bankruptcy was discharged July 2010 and our Foreclosure was Dec 2010…” “My credit score is 593 and my husbands is 585. There have been a couple CC payments that have been late but other than that we managed to pay everything on time, including our rent. Will we be able to qualify for Loan…Please | more...

July 28, 2014

FHA Streamline Refinancing Loans and Delinquent FHA Mortgages

By Joe Wallace

In our last blog post we examined FHA loan rules for skipped payments and delinquent mortgages with regard to an FHA refinance loan. HUD 4155.1 Chapter Three addresses these issues in general, stating the FHA requirement that, “The borrower must be current on the loan being refinanced for the month due prior to the month in which he/she closes the refinancing, and for the month in which he/she closes.” But what does the FHA loan rulebook specifically say about delinquent payments on mortgages to be refinanced with an FHA Streamline Refinance loan? HUD 4155.1 Chapter Six Section C states, “A delinquent mortgage is not eligible for streamline refinancing until the loan is brought current.” That means that skipped payments are not allowed, and the delinquency issue must be addressed as | more...

July 25, 2014

Missing Payments On FHA Loans Prior To Refinancing

By Joe Wallace

One common question about FHA refinance loans involves skipping payments. The ability to skip a payment prior to getting a refinance loan seems like an attractive option to many borrowers, and for those who have become delinquent on home loans. But does the FHA allow skipping payments? How do FHA loan rules address delinquent accounts that are being refinanced? HUD 4155.1 Chapter Three addresses these issues in general, stating: “The borrower must be current on the loan being refinanced for the month due prior to the month in which he/she closes the refinancing, and for the month in which he/she closes.” To clarify, Chapter Three, Section A of HUD 4155.1 provides the following example for us to review: “If the borrower is closing on April 8, he/she must have made | more...

July 17, 2014

FHA No Cash-Out Refinances With Appraisal Required Part 2

By Joe Wallace

In our last blog post we discussed some of the basic rules for FHA no-cash out refinances with an appraisal required. Those guidelines include rules on how lenders are to deal with subordinate liens such as a home equity line of credit, and what can be done when a borrower needs to buy out an ex-spouse or co-borrower’s equity in the property. HUD 4155.1 covers these rules in Chapter Three. For subordinate liens, FHA loan rules for this type of refinancing are clear: “A subordinate lien, including a Home Equity Line of Credit (HELOC), regardless of when taken, may remain outstanding (but subordinate to the FHA-insured mortgage), provided the • FHA insured mortgage meets the eligibility criteria for mortgages with secondary financing outlined in HUD 4155.1 5.C, and • combined | more...

July 17, 2014

FHA Refinance Loan Types: No Cash-Out Refinances With Appraisal Required

By Joe Wallace

There’s a type of FHA refinance loan available under the FHA single-family program known as a No Cash-Out Refinance (appraisal required). FHA loan rules for this type of refinance loan include guidelines for the maximum loan amount, how to calculate the existing mortgage debt, and how to deal with subordinate liens such as a home equity line of credit or HELOC. What is the maximum loan amount for this type of FHA refinancing? According to HUD 4155.1 Chapter Three Section B, we learn the following: “The maximum mortgage for a no cash out refinance with an appraisal (credit qualifying) is the lesser of the • 97.75% Loan-To-Value (LTV) factor applied to the appraised value of the property, or • existing debt. The total FHA first mortgage is limited to 100% | more...

July 9, 2014

FHA Reverse Mortgage Loan Rules For Occupancy: A Reader Question

By Joe Wallace

A reader asks, “My mother-in-law is sole owner of her home. she remarried and acquired a reverse mortgage. She is getting a divorce. unfortunately, she was force out of her house because of his violence. My question is how long can he live in the house if she is not there?” This situation calls for a lawyer–the laws of the reader’s state would definitely apply here. However, there is a very important FHA loan rule on HECM loans that borrowers need to be aware of and that definitely applies in this circumstance. FHA HECM loans require occupancy. A borrower who no longer occupies the home that secures an FHA HECM loan can and at some point definitely could have the entire loan declared due in full because failure to maintain | more...

June 25, 2014

FHA Refinance Loans and HELOC: A Reader Question

By Joe Wallace

A reader asks, “We have an old home built in 1924 in Vallejo, CA. We took a HELOC on the property in 2006 when the home appraised at around $450000. The loan was structured as 10 yrs. interest only payments, which will become principal and interest at the then current HELOC rate in Oct. of 2016. “The home is now worth about half of its prior value, and we are worried about what the HELOC rate will become in 2016. We still owe $244,000 and a house around the corner sold for $235,000. Is there an FHA loan we can qualify for to help get out from under this situation? We have excellent credit(over 760 each)and income around $120000 annually, with no debt other than this HELOC situation.” FHA loan | more...