August 18, 2011
The FHA has released FHA Mortgagee Letter 2011-28, which outlines “circumstances under which mortgagors must successfully complete a trial payment plan prior to the mortgagee executing a loan modification or partial claim action under the Federal Housing Administration
August 2, 2011
When looking for a home to purchase with an FHA loan, some borrowers find themselves in a situation where the results of the appraisal recommend mold abatement. Some potential borrowers challenge the mold abatement requirement–you can find many Q&A forums on real estate issues where posters have stated, “I’ve searched and did not find any documents that say that FHA requires mold to be remediated.” FHA standards for homes to be purchased with an FHA insured mortgage loan include a requirement that the property be free from defects and conditions which could affect the health or safety of the purchaser. A borrower may not find a “chapter and verse” type statement saying “Mold abatement is required”, but the health and safety clauses built into FHA loan regulations can and do | more...
July 28, 2011
Elsewhere on this blog, we’ve mentioned the policies of the FHA, Department of Housing and Urban Development, and federal law designed to protect borrowers from discriminatory practices in real estate lending and related areas. FHA home loans are, by federal law and program requirements, intended to be available to all qualified applicants regardless of race, color, national origin, religion, sex, familial status or disability. But some people still don’t understand the full implications of these laws, which extend to rentals and homeowners associations, not just the lending process. A July 20, 2011 press release from HUD describes charges against a Wisconsin landlord accused of violating the Fair Housing Act by “allegedly establishing different terms for a single mother
July 25, 2011
FHA insured loans feature down payments as low as 3.5%. Borrowers considering the purchase of a home with an FHA or conventional mortgage should anticipate this expense as they make a budget that includes the new home purchase. There are a variety of costs associated with a home loan including the down payment, closing costs, appraisal fees and other expenses. The down payment can be daunting for some borrowers–having enough time to save up for the expenses of a new home purchase is one reason most real estate experts and financial planners recommend borrowers spend at least a year preparing for a home loan. But even for those who take the time to plan and save, the down payment requirement may be more than they can afford. Is there any | more...
July 21, 2011
FHA loans are available with terms of 15 and 30 years. Borrowers can choose shorter loans with higher payments, or they can choose a longer loan term and lower payments depending on what their financial priorities are. The shorter-term loan with higher monthly payments can result in less money being paid in interest over the lifetime of the loan, but for many borrowers the higher monthly obligation isn’t as affordable. Choosing the right loan term for your financial goals and monthly budget can be tricky. Some choose the longer loan term to maintain their monthly budget, but as people progress in their careers it may be more affordable later to take on those higher payments. Some decide simply to pay more than the monthly amount due, but others may seek | more...
July 18, 2011
Not all FHA loans have the same rules or requirements. There are different rules for FHA-insured new purchase home loans for existing construction properties, condo projects and manufactured homes. For example, house hunters may encounter no age restriction on many new purchase home loans when it comes to typical suburban homes or condos–as long as the property meets FHA standards and the lender is willing to approve the loan. That’s not necessarily true for FHA mortgages on manufactured homes. FHA rules state that manufactured homes are only eligible if they have been built after June 15, 1976. FHA rules for manufactured homes also include a space requirement. “Manufactured homes are homes built as dwelling units of at least 320 square feet in size with a permanent chassis to assure the | more...
July 15, 2011
FHA loan applications require the borrower to submit information on past and current employment including gross income, how long the job has lasted, and other details. This data is not accepted at face value by the lender; the FHA requires the loan officer to verify sources of income to make sure they are legitimate and acceptable.
July 14, 2011
When a borrower applies for an FHA home loan, a down payment is required for all transactions. Unlike VA home loans, FHA mortgages do not have a zero-money-down option. Some buyers may struggle to come up with a down payment on the FHA mortgage, which is why the rules allow borrowers to accept funds from outside sources to help pay for up-front expenses like down payments and closing costs as permitted by FHA regulations. But the source of that income determines whether the money is considered a bona fide gift, or if it is considered an “inducement to purchase” which affects the amount of the FHA mortgage loan. Gift funds that come from anyone with “an interest in the sale of the property” can be considered inducements to purchase, and | more...
July 14, 2011
Getting approved for an FHA home loan means submitting a lot of personal information to the lender which is used to calculate a potential borrower’s ability to repay the loan. Your lender will ask for information on your current debts, credit lines, loans and other details. All of that information is compiled and compared to the amount of money the borrower gets from income sources the lender can verify. Once those details form a complete financial picture, the lender can make an educated decision on whether or not to approve an FHA home loan. The FHA allows 29% of your total monthly income to be used for housing costs and 41% towards housing expenses and other long-term debt. Getting that “debt picture” can be tricky–some income sources are not considered | more...
July 12, 2011
When a borrower applies for an FHA insured mortgage, he or she has the option of bringing a co-signer or co-borrower to the deal. It may be easy to assume the two terms are interchangeable, but they aren’t. Co-signers and co-borrowers have different rights and responsibilities under FHA regulations and it’s important to know which is which–especially if you’re the co-signer or co-borrower. The major difference between the two is that a co-borrower “takes title to the property”, meaning that there is shared ownership between co-borrowers. Co-signers sign the legal paperwork and are obligated to pay on the mortgage. Regardless of what financial arrangements have been made privately between the co-borrowers, on paper co-borrowers share responsibility for the mortgage payment. Co-borrowers must qualify for the VA loan together. Compare those | more...