Articles Tagged With: FHA Updates

September 23, 2014

FHA Loan FICO Score Requirements: A Reader Question

A reader asks, “I have a plan to pay off my student loan this year which is 18,000.00. My credit score is 565. This will leave me with 0 debt. Will it also improve my credit score and chances of getting a home loan?” These types of questions are difficult to answer because credit reporting agencies have their own criteria for evaluating credit, and apply their own standards for factors that might affect scores pushing them higher or lower. You may find that your FICO score reported by one agency are not the same as reported by another. That’s why FHA lenders look for a FICO score average to determine eligibility. Having no debt is certainly a plus for an FHA loan application, but a borrower’s credit activity in the | more...

September 15, 2014

Assessments Versus FHA Appraisals: A Reader Question

By Joe Wallace

A reader asks, “How is the home value assessed for a 203K, fixer-upper loan? For instance if we bought a home for $200,000, and also borrowed $30,000 in repair funds to improve the home, would the home value continue to be assessed at $200,000 or could an appraisal actually be used in this case? I have read that home value with FHA PMI purposes will only be assessed at the LOWER of an appraisal and the original loan amount.” For questions like these, terminology is important when it comes to arriving at the answer needed. For example, there is a big difference between an assessment and an appraisal–and appraisal is done by an FHA-assigned professional to determine the value of the property to be purchased or financed by an FHA | more...

August 27, 2014

FHA Eliminates Post-Payment Interest Charges

By Joe Wallace

The FHA has announced the elimination of certain interest payments previously owed beyond the date the FHA mortgage was paid in full. According to the press release HUDNo.14-104, titled, “FHA To Eliminate “Post Payment” Interest Charges, “borrowers who prepay their FHA-insured mortgages will not have to make interest payments beyond the date their mortgage is paid in full.” A new FHA rule known as “Handling Prepayments: Eliminating Post-Payment Interest Charges”, will apply for FHA mortgages closed on or after January 21, 2015. According to the press release, the new rule, “explicitly prohibits lenders from charging borrowers post settlement interest, which is broadly defined as a ‘prepayment penalty’ by the Consumer Financial Protection Bureau (CFPB), for all FHA Single Family mortgage products and programs.” This is an important development for borrowers | more...

August 12, 2014

FHA Loan Approval, FHA Loan Denial: The Process

By Joe Wallace

When you apply for an FHA loan, sometimes the hardest part is waiting to hear back from the lender that the loan has been approved and all can move forward. Did you know that FHA loan rules have a process for the lender to follow when the loan has been approved or denied? HUD 4155.1 has the guidelines and instructions to the lender for loan approval or rejection. Chapter One of this document has a section called Borrower Approval Or Rejection and tells the lender that, when the loan has been approved, there are a set of steps to be followed. 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 | more...

August 8, 2014

Who Can Get An FHA Home Loan?

By Joe Wallace

Do you know who is considered legally eligible to apply for an FHA home loan?There are many myths about FHA home loans. One type of myth involves the basic eligibility for an FHA mortgage. Some mistakenly believe the FHA is only for disadvantaged or low-income borrowers. There may be an assumption about a maximum income limit that is not true, and others may assume that the FHA program is only for those who have never purchased a home before. The truth is that any borrower who can qualify with credit scores, debt-to-income ratios and other financial data is able to apply for an FHA mortgage loan. What does the FHA loan rulebook (HUD 4155.1) say about the basic eligibility requirements for an FHA mortgage? According to Chapter Four of the | more...

August 6, 2014

FHA Loan Reader Questions: FICO Scores, Loan Amounts

By Joe Wallace

A reader asks, “I have a FICO of 610/608/586. Is there a chance of getting approved for a loan? How much if so? And where would I begin?” FHA loan rules specify that borrowers with FICO scores above 500 are eligible to apply for an FHA mortgage loan. However, lender standards are often higher than FHA minimums so you would need to check with the individual lender to see whether such scores are acceptable. The FHA cannot force a lender to offer FHA mortgage loans or refinance loans to those who don’t meet the financial institutions minimum FICO score guidelines. Borrowers who ask “how much?” are asking a common question, but the answer depends on the sale price of the home and the appraised value of that property. FHA loans | more...

August 5, 2014

FHA Loan Minimum Property Requirements For Mobile Homes: A Reader Question

By Joe Wallace

A reader asks, “I am applying for refinance on my double wide home and have had an appraisal done and have made all upgrades they have requested. Now they are asking me to have an engineer to come out to inspect the footings that were put in and have a certified engineer sign off on them. I have looked at the requirements and do not see where this is required.” “Can you give me any advice on this? The footings (pillars) were put in according to the manufactures specifications and were inspected at the time of the installation of the double wide.” What FHA loan applicants need to know in situations like these is that FHA minimum property requirements are not necessarily the only rules that apply. The answer to | more...

August 4, 2014

FHA Loan Lender Standards: A Reader Question

By Joe Wallace

A reader asks, “I was discharged from Chapter 7 in 2010, and the sheriff sale on my home was June 27, 2012. The mortgage company is telling me that the only way to do a conventional loan after two years from the sheriff sale, is to put 15% down. Is this correct?” We can’t comment on conventional loans–that’s outside the scope of our writing here, which covers FHA loans. However, the question is still valid when applied to an FHA loan application–what’s the right answer? Unfortunately, there is no single answer because in cases like these, lender standards may apply. The FHA loan program has minimums including a minimum down payment requirement of 3.5%. But in cases like these lender standards may require the borrower to have a longer waiting | more...

What you should know about FHA 203(h) Loans For Disaster Victims

August 1, 2014

Types of FHA Home Loans

By Joe Wallace

There are a wide variety of options when it comes to the FHA loan program. Did you know you can buy or refinance a home using an FHA mortgage? You don’t have to have an existing FHA mortgage in order to refinance into an FHA mortgage, and for qualifying borrowers aged 62 or older the Home Equity Conversion Mortgage loan offered under the FHA loan program can also be an option. For new purchase FHA home loans, borrowers have the option under the FHA single-family loan program to purchase a suburban home, a townhome, condo, duplex or other home classified as real property (no houseboats or motor homes). FHA loans for new purchases require a minimum 3.5% down payment. This is non-negotiable, though borrowers are free to make a larger | more...

July 30, 2014

FHA Credit Score Minimums: A Reader Question

By Joe Wallace

A reader asks, “My credit score is 583 on Quizzle and 604 on Credit Sesame, what is the criteria for credit scores? Would I have a chance of getting approved for a refinance cash out?” The first issue we’ll address here is credit reporting–your participating FHA lender will check your credit scores as reported by the three major credit reporting agencies. Those agencies are Equifax, TransUnion, and Experian. It may be best to contact these agencies directly to request your credit scores as that is what your lender will use. FHA loan rules state that, technically speaking, borrowers with credit scores above 500 qualify for the FHA loan program. That said, FHA loan FICO standards are MINIMUM standards, and the lender is free to require a higher minimum FICO score. | more...