Articles Tagged With: FHA Requirements

December 26, 2012

FHA Loan Rules For Loan Documents

If you are new to the house hunting process, there are some guidelines you should know that directly affect your search for a home to buy with an FHA guaranteed mortgage. Some of these guidelines are in place for your protection, some have been created to prevent tampering with the loan approval process–or the appearance of such tampering. For example: one common bit of “legal advice” you can get from any reputable source on contracts and credit agreements includes the warning never to sign a contract with blank spaces or agreements that seem to be incomplete. This is sound advice–what is to prevent one party or the other from filling in those blank spaces later with terms that are favorable only to that person or persons? The FHA takes the | more...

December 24, 2012

FHA Revises Flood Zone Determination Policy

By Joe Wallace

The FHA and HUD have issued revised and updated guidance for borrowers and lenders regarding its flood zone determination policy. On December 11, 2012, the FHA official site was updated to include Mortgagee Letter 2012-28, which is intended to overrule a previous Mortgagee Letter issued in 2010 on the subject. At one time, those applying for FHA loans were not affected by a mandatory flood zone determination policy. In the past lenders were “strongly encouraged” to get a flood zone determination for home purchased with an FHA insured mortgage. That policy was revised, and is now updated and re-stated in FHA Mortgagee Letter 2012-28. According to the new mortgagee letter, “FHA requires all mortgagees obtain a flood zone determination on all properties. The documentation provided to evidence the flood zone | more...

December 21, 2012

Can A House Seller’s Appliances Reduce The Amount of My FHA Loan?

By Joe Wallace

When you want to buy a home with an FHA loan, unless you’re having a house built to spec, chances are good that appliances like a washer/dryer, stove, refrigerator and other items could be included in the purchase. In some cases this is not a problem, but depending on what the buyer and seller agree will “come with the house” as part of the purchase, could such items reduce the amount of your FHA loan? There’s an FHA loan rule about something known as an “inducement to purchase”. A seller is permitted to make a contribution to some financial aspects of the FHA loan (but not the down payment) in order to make the deal more attractive. Those contributions are limited as part of “the six percent rule”. According to | more...

December 19, 2012

FHA Loans, Scams, and Standard Procedures

By Joe Wallace

In today’s world, protecting your identity, personal information, credit card numbers and Social Security data is crucial. There are plenty of warnings of identity fraud scams across all types of business, but lending and credit are especially vulnerable areas. Borrowers should always take steps to protect themselves against scammers; beware of third parties who contact you requesting your personal data by phone, e-mail, or even in person. All that said, there are some standard operating procedures borrowers should be prepared for that are NOT attempts to harvest your personal data. The key to knowing which is which–a scam versus a legitimate business transaction–is often how and when these procedures occur. For example, FHA loan rules state that a lender may need or require something called a “blanket authorization” in order | more...

December 18, 2012

How Long Does FHA Loan Approval Last?

By Joe Wallace

The FHA has specific procedures for everything from credit checks to the money needed to be paid at closing time. There are also rules for loan approval including how long that approval remains in effect. How long should a borrower expect to have approval for an FHA mortgage without taking action on that loan approval? Let’s look at what the FHA says about this process in HUD 4155.1, Chapter 1, Section A which includes information on what happens after loan approval. According to the FHA, when the application is approved, the lender; • records the results of the credit analysis on the HUD-92900-LT, FHA Loan Underwriting and Transmittal Summary • enters any modification of the mortgage amount or approval conditions under “Underwriter Comments” on the form, and • approves the | more...

December 12, 2012

Are Military Members Eligible For FHA Home Loans?

By Joe Wallace

Members of the Army, Navy, Air Force, and Marine Corps have a military benefit through the Department of Veterans Affairs that they can use to purchase a home with no downpayment in most cases, and several other perks. Some of those perks are very similar to FHA loans, such as the option to pre-pay or pay off the loan ahead of schedule without a penalty. But are military members who are eligible for VA loans also eligible for an FHA loan if they choose FHA over VA? Does having the option to apply for a VA home loan render them ineligible for an FHA mortgage instead? FHA loan rules do not exclude military members; there are many reasons why a borrowe may choose not to use his or her VA | more...

December 10, 2012

How FHA Loan Limits Work

By Joe Wallace

Recently the FHA announced the new maximum loan limits for 2013. These limits are normally revised annually, but sometimes changes in the law may cause the limits to be recalculated depending on the new regulations put into place. The FHA limits published for 2013 are in effect for the entire calendar year from 1 January 2013 to 31 December 2013 unless otherwise changed by law. According to the FHA official site, maximum loan limits are developed as follows: “The statutory provisions of the National Housing Act establish the maximum loan limits and mortgage amounts for all FHA mortgage insurance programs. Maximum loan limits vary depending upon the • specific program under which a loan is insured • number of dwelling units in the property (one to four units), and • | more...

December 5, 2012

New Hampshire Gets FHA/HUD Hurricane Sandy Relief

By Joe Wallace

New Hampshire is the latest state to receive FHA/HUD relief in the wake of Hurricane Sandy. On Monday, December 3 2012, the FHA and HUD issued a press release announcing foreclosure relief, FHA loans and refinancing plus other help for those recovering from storm damage. According to HUDNo.12-184, “U.S. Housing and Urban Development Secretary Shaun Donovan today announced HUD will speed federal disaster assistance to the State of New Hampshire in addition to resources being provided by FEMA and other federal partners. HUD will provide support to homeowners and low-income renters forced from their homes due to Hurricane Sandy.” Some may wonder why at takes time for all areas to get such disaster assistance from the FHA and HUD. The answer is simple–these benefits become available once an affected region | more...

December 4, 2012

FHA Loan Rules For Maximum Loan Amounts

By Joe Wallace

Borrowers new to the FHA loan program naturally want to know how much they may be permitted to borrow with an FHA guaranteed mortgage loan. While there is no single, fixed dollar amount maximum for the FHA loan program in general, there are rules and guidelines that govern how much a qualified borrower can get. The FHA loan rules are described in a publication called HUD 4155.1, which includes the following in FHA loan limits: “The statutory provisions of the National Housing Act establish the maximum loan limits and mortgage amounts for all FHA mortgage insurance programs. Maximum loan limits vary depending upon the • specific program under which a loan is insured • number of dwelling units in the property (one to four units), and • geographic location of | more...

December 3, 2012

FHA Loan Rules For Multiple Residences: A Reader Question

By Joe Wallace

A reader asks, “Any person individually or jointly owning a home covered by an FHA- insured mortgage in which ownership is maintained may not purchase another principal residence with FHA insurance, except in certain situations as described in HUD 4155.1 4.B.2.d.” “What are the exemptions? FHA loan rules, as published in HUD 4155.1 Chapter Four, Section B, state: “To prevent circumvention of the restrictions on making FHA-insured mortgages to investors, FHA generally will not insure more than one principal residence mortgage for any borrower. FHA will not insure a mortgage if it is determined that the transaction was designed to use FHA mortgage insurance as a vehicle for obtaining investment properties, even if the property to be insured will be the only one owned using FHA mortgage insurance.” There are | more...