Articles Tagged With: FHA Requirements

June 23, 2011

What is the FHA 203(b) Loan Program?

If you’re new to FHA home loans, it’s easy to get confused by the different types of FHA insured mortgages available. There are FHA 203(b) loans, the FHA 203(k) and a host of others. Some borrowers are ready, after seeing the alphabet soup of different programs a borrower could apply for, to throw up their hands and just ask for “the FHA loan everybody applies for when they want a new home.” That loan is known as the FHA 203(b), the single-family mortgage insurance program most commonly used all over America. According to the FHA official site, the FHA 203(b) “may be used to purchase or refinance a new or existing one-to-four family home in both urban and rural areas including manufactured homes on permanent foundations. Typically, lenders offer terms | more...

June 21, 2011

Facts About FHA Loan Fees

By Joe Wallace

When you apply for an FHA home loan, make the commitment to buy and close the deal, there are a variety of services which must be paid for as part of the home buying process. Some fees are paid by the borrower, some by the lender, and some by the seller. Do you know what fees you’re responsible for as a borrower taking out an FHA mortgage? FHA loan fees the borrower must pay include a loan origination fee, which includes payment for the cost of doing business with your chosen lender. The buyer is also responsible for any title search and examination fees, plus legal fees where applicable. For some home sales with an FHA loan, the sellers may agree to pay the legal fees–part of an incentive to | more...

June 20, 2011

Can I Use Rental Income on My FHA Loan Application?

By Joe Wallace

An FHA loan applicant who owns a property he or she is currently renting would naturally want to include that income on the loan application. As with all other sources of income, the borrower must not only list the amount of that income, but also be able to show to the lender that the money is stable. Since an FHA lender is charged with verifying all sources of income, the borrower must provide proof that rent money coming in is likely to continue. What does the FHA require as proof of dependable income when it comes to rent payments? According to the FHA official site, “Examples of stability may include a current lease, an agreement to lease, or a rental history over the previous 24 months that is free of | more...

June 20, 2011

FHA Loans and Rehab Grants

By Joe Wallace

One frequently asked question about FHA loans is about FHA grants for home repair. Does the FHA provide grant money for home buyers or FHA borrowers to repair or fix up a home? The short answer is no. While you may read FHA press releases such as a recent item about the FHA awarding $27 million in “sweat equity grants”, (HUD Press Release No. 11-122), it’s important to make the distinction between a grant to

June 17, 2011

The FHA Energy Efficient Mortgage

By Joe Wallace

Making improvements in a new home to include energy efficient upgrades can save a borrower a lot of money in utility bills. Modern windows, solar powered water heaters, improved air conditioning systems and other upgrades are all within a borrower’s reach when purchasing a home with an FHA insured mortgage thanks to a feature called the Energy Efficient Mortgage. FHA Energy Efficient mortgages are for qualified borrowers buying a single family home. Under the terms of an FHA Energy Efficient Mortgage or EEM for short, energy efficient improvements must be selected by the borrower and the amount of energy savings the improvements would give every month. There must be a tangible benefit to the borrower in terms of energy efficiency and/or savings for each improvement. These savings must be calculated | more...

June 16, 2011

Can I Use a Power of Attorney For an FHA Home Loan?

By Joe Wallace

There are many situations where borrowers, co-borrowers or family members might need to use a power of attorney to continue financial arrangements, including an FHA home loan. Some borrowers or their family members, acting on behalf of someone who can’t represent themselves, may furnish a power of attorney (POA) to continue a financial arrangement or give final approval. One popular use for a power of attorney is when a military member is suddenly deployed or sent on a military assignment on short notice. The purchase of a new home shouldn’t be cancelled on account of an important job requirement–if the person is willing to let someone else represent him or her using a power of attorney. When it comes to FHA home loans, the rules state, “A power of attorney | more...

June 10, 2011

FHA Advice On Home Loans and Lenders

By Joe Wallace

FHA home loans are designed to be pro-consumer. While they don’t penalize a lender in any way, FHA loan rules do restrict the types and amount of fees, charges and other costs associated with borrowing. The mission of the FHA is to be fair to all parties, borrower and lender alike. The borrower doesn’t pay inflated fees, and the lender gets a loan guarantee from the government. The FHA offers referrals for housing counselors and advice to house hunters exploring their options under the FHA loan program. The FHA official site has plenty of sound advice for people trying to navigate the complexities of buying a home, getting the best price, and other aspects of becoming a home owner. A lot of it seems fairly obvious to experienced borrowers, but | more...

June 8, 2011

FHA Loans: Deed-In-Lieu of Foreclosure Rules

By Joe Wallace

Borrowers having trouble making payments on their FHA mortgages are encouraged to contact the FHA and the lender as quickly as possible to discuss possible arrangements to help prevent the loan from going into default and foreclosure. In some cases a loan forbearance may be possible or a refinancing of the FHA loan, but in more extreme cases the borrower may consider a move called deed-in-lieu of foreclosure, sometimes called deed-in-lieu for short. A deed-in-lieu arrangement is for borrowers in default on their FHA loans who don’t qualify for any other HUD loss mitigation program. In essence, deed-in-lieu results in the borrower signing back the home to the mortgage company. FHA rules state that deed-in-lieu proceedings must be initiated within six months of the loan going into default, and there | more...

June 7, 2011

FHA Reverse Mortgage Loan Counseling Rules

By Joe Wallace

FHA Reverse Mortgages, also known as Home Equity Conversion Mortgages, have unique requirements because of the nature of the loan. HECM loans, which are intended for seniors age 62 and older, require no mortgage payments during the lifetime of the loan. HECM loans are paid off when the borrower dies or chooses to sell the property secured with the reverse mortgage. FHA rules state all HECM applicants must receive counseling to insure they are informed borrowers, fully aware of the responsibilities and requirements of a HECM loan as well as the benefits. This counseling must happen before the borrower commits to a reverse mortgage. According to Section 255(d) of the National Housing Act and FHA regulations found in 24 CFR 206.41, “all prospective Home Equity Conversion Mortgages (HECM) borrowers must | more...

June 3, 2011

The FHA Loan Application and Personal Debt

By Joe Wallace

When applying for an FHA home loan, the borrower is asked to list a variety of personal information including details about open lines of credit, car payments, any previous or current mortgages and other important details. All this data is used by the lender to establish how much debt the borrower has, how adding an FHA mortgage commitment might affect the ability for the borrower to pay, and how much money is coming in versus how much is owed. Good lenders know that debts and income are always changing–they are not fixed or constant. People pay off bills, credit cards and other obligations. They also open up new lines of credit, take on additional debt and increase their levels of financial responsibility. That’s one reason why credit experts advise FHA | more...