Articles Tagged With: FHA Updates

April 9, 2015

FHA Mortgage Loan Interest Rate Trends: Mixed

Mortgage loan rates have been up and down since our last report–there has been some volatility that saw rates climbing ahead of last week’s Employment Situation Report, then making strong gains last Friday, which were in turn undone by upward movement the following Monday. 30-year fixed rate conventional mortgage rates have, best execution, climbed to 3.75% as of Wednesday’s reports at market closing time. The release of Fed meeting minutes this week was expected to be a market mover, but rates moved more or less sideways in the wake of the release of that information. FHA mortgage loan rates have found a “comfort zone” in all this, with a range between 3.25% and 3.5% best execution. FHA mortgage loan interest rates tend to vary more among lenders than their 30-year | more...

April 9, 2015

FHA Loan Interest Rates

By Joe Wallace

Many potential FHA borrowers want to know more about the ins and outs of mortgage loan interest rates. When it comes to FHA mortgages, it’s easy to misunderstand the relationship between a participating FHA lender and the FHA itself. For example, some assume that the FHA sets and/or regulates mortgage loan rates (it does not). So if the FHA does not set or regulate the interest rates on an FHA mortgage or refinance loan, who does? The short answer is that the lender sets the rates. The FHA loan rule book only requires that lenders set rates that are “reasonable and customary” based on similar loans. But market forces that affect other types of mortgage interest rates also affect FHA rates. The borrower and lender negotiate the FHA loan rate | more...

When Is An FHA Loan Better Than A Conventional Loan?

April 3, 2015

April Is Fair Housing Month

By Joe Wallace

April is Fair Housing Month. The FHA and HUD have made announcements every year at this time to raise public awareness of fair housing laws such as the Fair Housing Act and FHA/HUD policy for equal housing access for all regardless of gender, race, national origin, belief, sexual orientation, disability, family status, etc. “Every American deserves a fair chance to secure safe and stable housing,” said HUD Secretary Julián Castro, who was quoted in a new mortgagee letter published by the FHA/HUD. “At the core of everything we do to improve housing opportunities is a firm belief that no family should ever be denied the opportunity to own or rent a home because of what they look like, where they come from, how they get around, how they speak, who | more...

March 27, 2015

FHA Home Loan LTV Calculations: A Reader Question

By Joe Wallace

A reader asks, “Is the LTV calculated on the total loan amount (base loan+MIP), or the base loan amount only?” FHA loan rules covering the subject of loan-to-value calculations are found in HUD 4155.1 Chapter Two Section A, which states: “The maximum mortgage amount that FHA will insure on a purchase is calculated by multiplying the appropriate loan-to-value (LTV) factor by the lesser of the property’s –sales price, subject to certain required adjustments, or –appraised value. In order for FHA to insure this maximum loan amount, the borrower must make a required investment of at least 3.5% of the lesser of the appraised value or the sales price of the property.” The 3.5% investment, better known as the borrower’s down payment, is also covered in Chapter Two Section A with | more...

March 26, 2015

FHA Loans With Co-Borrowers: A Reader Question

By Joe Wallace

A reader asks, “Hello. Im a first time buyer my income its from 45 to 50g a year, as i understand i qualify base on my income and fico score. my question is, since my wife did bankruptcy last year , can i include her in the loan for ours first home?” When answering reader questions like this, it’s important to note that state laws have a lot to say in cases where the borrower lives in a community property state. Community property laws govern how new debts are incurred once the legal marriage begins; FHA loans address mortgage loan approval rules in general, but the FHA loan rulebook does not override the law. FHA loan rules in HUD 4155.1 state that all borrowers must credit qualify for the FHA | more...

March 25, 2015

Significant Changes In Borrower Financial Status: An FHA Loan Question

By Joe Wallace

A reader asks, “I am in the process of buying a new home which is scheduled to be closing is by April 30th.My loan processor had just asked me last week to write a letter explaining why there is a significant overdraft fees on my checking account?. i am worried. please advise.” In the same way that borrowers are advised not to apply for new lines of credit leading up to a home loan application, they are also urged to maintain a record of steady, on-time payments until loan approval. The reason for this is simple–the lender is required to document and make loan approval decisions based on any “significant changes” to a borrower’s financial position. A home loan is a major financial commitment and a borrower who has significant | more...

March 21, 2015

FHA Loans And Your Credit: A Reader Question

By Joe Wallace

A reader asks, “Do you know what kind of things I can do to make my FICO score better to get a FHA loan? I tried to get my first house and was denied the loan because of “negative credit marks”. I really want to be able to support my family. I’ve been following this guide to improve my standing: (finance guide name deleted) Do you know if all that stuff is correct? Is there anything else I can do? Right now I don’t have the money to pay a professional, so I’m reading as much as I can to do it on my ownn We couldn’t comment on the guide the borrower mentions in the question–we haven’t read it and we aren’t experts on improving credit scores. How to improve | more...

March 17, 2015

More On FHA Appraisals Versus Home Inspections

By Joe Wallace

In our last blog post we addressed a reader question about FHA appraisals and why appraisals are not considered home inspections. This is a very important issue and deserves some extra attention here for one important reason: an FHA appraisal is never a substitute for a home inspection. Borrowers may be tempted to save a few hundred dollars and skip having the voluntary (as in, not required as a condition of the loan) home inspection performed, but doing so is a very bad idea. An FHA appraisal is, as the FHA official site points out, for the lender and addresses the lender’s needs only. A home inspection, which is not required by the lender as a condition of the loan, is for the borrower and is designed to look out | more...

March 16, 2015

FHA Loan Income Rules: Projected Verifiable Income

By Joe Wallace

We write a lot about FHA loan income rules. When the lender is processing your FHA loan application, your verifiable income is counted against your monthly financial obligations. The lender must review all sources of your income to determine whether those sources are stable, reliable, and likely to continue for a reasonable period of time. Your job and current income is verified by the lender by way of pay stubs and other documentation. But what happens when a borrower has a pay raise or promotion due later on that could positively change the borrower’s debt to income ratio? Can the lender include such projected income in the equation? The rules covering this issue are found in HUD 4155.1 Chapter Four Section E, which says in part: “Projected or hypothetical income | more...

March 13, 2015

FHA Loan Reader Questions: Seasoning Period Following Bankruptcy

By Joe Wallace

A reader asks, “On 3/11/15 I was told by a potential lender that consumers who have claimed bankruptcy must wait 4 years to potentially qualify for ANY loan… conventional or FHA. My bankruptcy was discharged in August 2013 and I have been rebuilding my credit ever since…. with the hopes that I could start looking at buying a home at the near 2 year mark, post discharge. Can someone please clarify this for me? And give the source of the data that is accurate? The lender just blew me off…” This reader’s question asks if what a lender told her about waiting four years after bankruptcy may be true if those are that particular lender’s standards. Those standards may vary from bank to bank, lender to lender. But if the | more...