Articles Tagged With: FHA Refi

June 24, 2014

FHA Appraisal Rules For Foundations: A Reader Question

A reader asks, “We are up for a FHA refinance and the appraiser noted that we have a crack in our foundation. We have never had water in the basement ever and it hasn’t moved since i originally purchased the home. We are waiting to hear back from our lender. What is the likelihood this loan will be denied?” There are several issues that apply in a situation like this including the severity of the foundation problem. Not knowing that specific information makes it hard to know which way the call might go but it’s impossible to speculate what one financial institution might do. But that’s not the most relevant issue at work here. State or local building code may address the foundation issue specifically. If the home is not | more...

June 16, 2014

Basic FHA Refinance Loan Rules

By Joe Wallace

FHA loan rules governing refinance loans are found in HUD 4155.1, Chapter Three. In this chapter the FHA lists some basic rules that can and do affect all FHA refinance loans. Knowing these rules can help you better understand the FHA refinance loan process. For example, did you know that FHA loan rules say that even when an FHA appraisal is still valid on a property (they are valid for six months), you cannot re-use the same appraisal for an FHA refinance that was used to purchase the home originally? Chapter Three states: “FHA appraisals on existing properties are valid for six months. However, appraisals cannot be reused • during the six month validity period once the mortgage for which the appraisal was ordered has closed, or • for a | more...

May 12, 2014

FHA Refinance Loans With No Cash Out

By Joe Wallace

There are several FHA refinance loan options. One is FHA Streamline Refinancing, which has no FHA-required credit check or appraisal (though your lender may require one of both). Another is the FHA Cash-Out refinance loan option, where a borrower can take cash back on the loan once the original loan is paid in full. The cash back on such loans can be used for any purpose acceptable under the terms of the new loan agreement. But there’s another refinance loan option available similar to cash-out in that a credit check is required, but without cash back. The no-cash-out FHA refinance loan has rules covered in HUD 4155.1, including maximum loan amounts and what can be added to the new loan amount. FHA loan rules also cover what kinds of liens | more...

April 14, 2014

FHA Loans Following Foreclosure On A Previous FHA Mortgage

By Joe Wallace

There are loan rules for when a borrower can apply for a new FHA mortgage following a short sale, bankruptcy, or similar scenarios, but one area that is commonly misunderstood is what happens when a borrower goes into foreclosure on a home purchased with an FHA mortgage, with regards to how soon after that bankruptcy has been disharged. FHA loan rules for this situation can be found in HUD 4155.1 Chapter Four, Section A. It says, “If the borrower has had past delinquencies or has defaulted on an FHA- insured loan, there is a three-year waiting period before he/she can regain eligibility for another FHA-insured mortgage.” In addition to clearing up confusion over that basic policy, Chapter Four also addresses when that waiting period is considered effective: “The three-year waiting | more...

March 12, 2014

FHA Loan Answers: Can I Skip Payments On My Mortgage If I Refinance?

By Joe Wallace

When considering your FHA home loan refinance options, there’s a list of common questions many borrowers need answers to before deciding on the right FHA refinance loan. One such question involves the state of the current mortgage before the new loan is approved. Can a borrower skip a payment on an FHA or conventional mortgage as the new FHA refinancing loan is approved? FHA loan rules address this issue in HUD 4155.1, Chapter Three, Section A. It says: “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. Example: If the borrower is closing on April 8, he/she must have made the March payment within the month of | more...

March 11, 2014

FHA Refinance Loan Basics: Purposes of the Loan, Limits, and Loan Terms

By Joe Wallace

FHA loan rules permit the refinance of mortgage loans under a variety of circumstances. Borrowers applying for some types of FHA refinancing can go from conventional to FHA, from adjustable rate mortgages to fixed rate, and for those with existing FHA loans, an FHA-to-FHA streamline refinance is also possible. Chapter Three of HUD 4155.1 is where the basic rules covering refinance transactions can be found. Chapter Three begins by stating the basic purposes of a refinance loan which include the following: “A refinance transaction is used to pay off an existing real estate debt with the proceeds of a new mortgage • for borrower(s) with legal title, and • on the same property. Note: The borrower is eligible to refinance the loan, as long as he/she has legal title, even | more...

March 7, 2014

FHA Streamline Refinancing Loans Net Tangible Benefit Table

By Joe Wallace

Recently we wrote about the requirements for FHA streamline refinance loans to have a “net tangible benefit” to the borrower. The type of benefits mentioned in the FHA loan rulebook for streamline loans (in general) include a lower interest rate and/or monthly payment for the borrower. The purpose of an FHA streamline refinance loan is to help a home owner with an existing FHA mortgage get into a more affordable mortgage loan payment without an FHA required credit check or appraisal. (The lender may require one anyway.) Since there are many different types of FHA loans available, the net tangible benefit for the borrower may be different depending on the kind of loan being refinanced. The FHA has a table showing all the requirements for the different types of loans | more...

March 7, 2014

FHA Streamline Refinancing: “Net Tangible Benefits”

By Joe Wallace

Recently we posted about FHA streamline refinance loan options. FHA streamline loans are for existing FHA mortgages and feature no money back to the borrower. That means there is no FHA-required credit check or appraisal, though the lender may require one. FHA Streamline Refinancing rules as printed in HUD 4155.1 state that in most cases an FHA streamline refinance must result in a “net tangible benefit” to the borrower. What does this mean and how can a borrower know what those benefits will be? HUD 4155.1 Chapter Six says, “The lender must determine that there is a net tangible benefit to the borrower as a result of the streamline refinance transaction, with or without an appraisal. Net tangible benefit is defined as • a 5% reduction to the principal and | more...

March 6, 2014

FHA Streamline Refinances–What’s Possible?

By Joe Wallace

FHA Streamline refinancing loans are for existing FHA mortgages. They feature no FHA-required appraisal in most cases, and there is no FHA-required credit check in most cases. Some borrowers who want to apply for this type of FHA refinance loan may wonder if the transaction they have in mind is possible under the rules of the FHA loan program. For example, some borrowers want to refinance from a conventional mortgage to an FHA refinance, which is not possible under the FHA Streamline program (but is under FHA Cash-Out Refinancing). What transactions ARE permitted? According to HUD 4155.1, Chapter Six, Section C under the heading “Types Of Permissible Streamline Refinances” we find a list of the following: • no cost refinances • ARM to ARM refinancing • ARM to fixed rate | more...

January 30, 2014

FHA Loan Refinancing: What You Should Know

By Joe Wallace

If you’re interested in refinancing your home loan with an FHA loan but have never explored your refinancing loan options before, there are a few things you should know about the FHA refinancing loan program that can help you make the best choices for your needs and wants. The rules which govern FHA loan refinancing are found in HUD 4155.1, Chapter Three (and elsewhere). In this portion of the FHA loan rulebook. we learn that FHA refinancing loans include the following: streamline refinances of existing FHA-insured mortgages made with or without appraisals no cash out refinances (rate and term) of conventional and FHA-insured mortgages, where all proceeds are used to pay existing liens and costs associated with the transactions cash out refinances How long a term is an FHA loan | more...