Articles Tagged With: FHA Requirements

June 3, 2011

FHA Loans and Extensions of the Conditional Commitment

As stated elsewhere in this blog, the appraisal process is one of the most important parts of the FHA home loan process. A borrower (and the lender) learns about the general state of the property and its fair market value thanks to the FHA appraisal, and once that process has been completed the FHA loan process can move forward and a buyer can offer a commitment to purchase the property. Due to the ever-changing nature of the housing market, FHA appraisals have an expiration date–the appraisal is not good indefinitely. What happens if for some reason the buyer delays in committing to the purchase of the home, or otherwise runs the risk of having the deal close after the appraisal has expired? Does the buyer have to pay for a | more...

June 2, 2011

FHA Loans: How Do I File A Complaint About Closing or Settlement Issues?

By Joe Wallace

FHA loans have a variety of rules and regulations about closing and settlement of FHA insured mortgages. Borrowers are protected under the Real Estate Settlement Procedures Act against fraud and shady business practices including kickbacks, artificially inflated fees and costs, and other problems. Thanks to state and federal laws, it’s more difficult than ever to take advantage of an FHA loan applicant or inflate the costs associated with an FHA home loan.

June 1, 2011

FHA Loans and Escrow Accounts

By Joe Wallace

The Real Estate Settlement Procedures Act provides powerful consumer protections when it comes to home loans. It establishes limits, requires lenders to be transparent when it comes to fees and expenses, and requires the borrower to be fully informed as to the costs of a home loan. FHA borrowers and conventional loan applicants alike are protected under RESPA. There are many protections, rules and requirements under RESPA, but one particular part of the act applies to escrow accounts for real estate loans. According to the FHA official site, “Section 10 of the Real Estate Settlement Procedures Act (RESPA) limits the amount of money a lender may require the borrower to hold in an escrow account for payment of taxes, insurance, etc. RESPA also requires the lender to provide initial and | more...

May 30, 2011

FHA Minimum Property Requirements (Part Two)

By Joe Wallace

In our last blog post we discussed FHA minimum property requirements. Any home a buyer wants to make a serious offer on with an FHA insured loan must live up to the FHA’s minimum property standards or the loan cannot be approved. That doesn’t mean the home must be 100% in compliance when the appraiser comes to review the property, but it does mean that any deficiencies found must be corrected prior to the loan being closed upon. The FHA has three basic principles that guide an FHA appraiser when examining the home–it must be safe, sound, and secure. There are specific requirements in each area. For example, a home must not have stairways that aren’t equipped with hand rails, there must be no exposed wiring in the home, and | more...

May 30, 2011

FHA Loans: Minimum Property Requirements

By Joe Wallace

First-time applicants for an FHA mortgage learn soon learn about the FHA’s list of minimum property requirements, which any property bought with an FHA insured loan must live up to in order to get loan approval. The FHA has three guiding principles that inform its list of minimum property requirements, defined by what some appraisers call “the three S’s” which include safety, soundness and security. An FHA appraiser will come to inspect the property a borrower wants to buy, looking at the home to make sure it meets the FHA standards in each of these three areas. When it comes to safety, the FHA tells its appraisers, “Deficiencies or a lack of functioning components of plumbing, electrical or heating and cooling systems may create hazards that could be considered health | more...

May 27, 2011

Can I Assume an FHA Loan?

By Joe Wallace

There was a recent question in the comments section of this blog about FHA loan assumptions, so we thought it would be a good time to review the basics. Assumption of an FHA loan is a process where, according to the FHA official site, “the responsibility of the mortgage is acquired by another person through either Simple or Creditworthiness process.” This means that a potential borrower could take over the FHA mortgage of another borrower, but in some cases the process varies depending on when the FHA insured loan was originated. The “Simple” assumption process is only for FHA loans originated before December 1, 1986. Loans after that date may also be assumed, but the FHA requires a “creditworthiness assumption process”. Simple assumptions allow the borrower and lender to agree | more...

May 26, 2011

FHA Loans And Your Credit–What Is The Lender Looking For?

By Joe Wallace

In our last blog post, we discussed FHA loans and credit history. Many people are afraid to apply for a home loan because of past credit mistakes, but it’s easy to assume the worst about credit reporting, your history with credit, and what an FHA approved lender is looking for when reviewing an FHA loan application. In some cases, those assumptions also apply to a lack of credit history. An FHA lender must investigate the applicant’s credit reports. A few late credit card payments or other minor issues in the past aren’t enough to condemn the borrower or have an application rejected. The FHA rules don’t have a chart for counting credit issues and a cut-off number for how many late payments are too many. Instead, the FHA rules state, | more...

May 24, 2011

FHA HECM Loans and Fees For Required Counseling

By Joe Wallace

An FHA Home Equity Conversion Mortgage or HECM loan lets qualified borrowers age 62 or older get a loan on their home which is not paid back in any way until the borrower dies or sells the property. Borrowers can get a line of credit or cash payments (or combinations of the two) depending on how the loan is set up. There are specific rules and requirements for HECM loans, and borrowers must get mandatory HECM loan counseling through an FHA-approved agency before the loan will be approved. The FHA is strict about the counseling requirements–an informed borrower is able to make the right choices for their circumstances. But HECM counseling is not free, and the counseling agencies are not government entities. Because the borrower is required to pay a | more...

May 23, 2011

FHA Loans: The Difference Between a Co-Borrower and a Co-Signer

By Joe Wallace

When applying for an FHA home loan, a borrower does not have to share the financial responsibility for the mortgage all by themselves. FHA rules allow a co-borrower or co-signer to apply alongside the borrower. In some cases this can improve the FHA loan applicant’s chances of getting a loan approved, and it’s also a way for a borrower with established credit to help a co-borrower become a home owner under the proper circumstances. It’s easy to assume a co-signer and co-borrower are the same thing, but in the eyes of the FHA and the lender, these are two separate terms. Co-signers don’t have the same benefits as co-borrowers, though they may share the same responsibilities in many cases. According to the FHA, “Co- borrowers take title to the property | more...

May 20, 2011

FHA Loans: Ineligible Properties For HECM Purchase Loans

By Joe Wallace

The FHA Home Equity Conversion Mortgage, also known as a reverse mortgage, is for borrowers age 62 or older who want to borrow against the equity built up in their homes. There are a variety of requirements for this unique FHA loan product which allows eligible borrowers to make no mortgage payments, collect cash against the equity in the home or get a line of credit. The loan is paid off when the borrower dies or sells the property. There is a variation of the HECM loan known as a HECM Purchase loan. According to the FHA, HECM Purchase Loans allow “seniors, age 62 or older, to purchase a new principal residence using loan proceeds from the reverse mortgage.” FHA HECM loan requirements include using the home as the primary | more...