Articles Tagged With: First-time Home Buyer

November 14, 2022

First-Time Home Buyers And FHA Loan Approval: New Rules

The FHA and HUD made changes to home loan approval procedures aimed at helping first-time home buyers. These changes allow participating FHA lenders to use qualifying “positive rental payment history” in their loan approval process, but only for applicants meeting the FHA description of first-time home buyers. Borrowers who worry about their ability to be approved for a home loan may have an additional advantage using an FHA mortgage because of this. According to the HUD official site, rental data is not included in “most Tri-Merged Credit Reports or Residential Mortgage Credit Reports” which are used for FHA-insured loans. When the information IS available, it may be as separate documentation. The FHA has now updated loan approval processes and software so lenders may add positive rental information as a factor | more...

November 9, 2022

FHA Loans In 2023: Changes In The Housing Market

By Joe Wallace

Some market watchers are asking the question–is it possible we will see house prices fall in 2023? Indicators from Federal National Mortgage Association or Fannie Mae point to a cooling-off period for home prices next year. Earlier in 2022, Fannie Mae forecasted home price growth at over four percent in 2023; those numbers have since been revised. The expectations in the last three months of 2022 now tell a different story: Fannie Mae now expects home price declines of as much as 1.5% in the coming year. What created the 2022 seller’s market in the first place? Rising equity, a shortage of housing inventory, and high demand were all contributing factors. And as mortgage rates started approaching 7%, the motivation to buy seems to be tapering but it may take | more...

November 3, 2022

Do You Need A Co-Signer For An FHA Mortgage?

By Joe Wallace

Some house hunters are worried they may not be able to qualify for a home loan on their own and feel the need to add a co-signer. Other borrowers are buying a home with someone else (often significant others or spouses) and need to have more than one name on the mortgage. FHA home loans (yes, refi loans too) allow one borrower or multiple borrowers. The key to understanding how loan approval works for an FHA mortgage is to remember that all parties to be obligated on the mortgage loan must be able to financially qualify. FHA Borrowers And Co-Borrowers FHA loan rules instruct the lender that to be considered eligible for an FHA home loan or refinance loan, “…all occupying and non-occupying Borrowers and co-Borrowers must take title to | more...

October 31, 2022

Important Features To Consider When Shopping For A New Home

By Bruce Reichstein

Are you new to house hunting? There are things to look for when considering homes to buy with an FHA mortgage. These are features that often may enhance the home and make it more efficient. Once you are used to shopping around for a home, you can establish a checklist to remind you as you review each property. Ceiling Fans Not all homes come with ceiling fans. Are you buying a home in a warmer or more humid climate? A lack of ceiling fans can be a drawback; homes that do not have them installed might have other issues such as mold or mildew, but this will depend greatly on how the individual house was maintained. Exterior Lighting Exterior lights can provide additional safety, and not just to prevent burglaries | more...

October 25, 2022

FHA Rehab Loans: The Limited 203(k) Option

By Bruce Reichstein

FHA 203(k) rehab loans include an option for smaller, less ambitious rehab projects. Borrowers who want a home loan to do rehab or repair work but don’t want to do a large project might assume FHA loan funds are not available, but this is not true thanks to the FHA Limited 203(k) Rehab Loan option. What Is The FHA Limited 203(k) Rehab Loan? HUD 4000.1, the FHA loan handbook, describes the FHA Limited 203(k) mortgage as being good for “minor remodeling and non-structural repairs”. The rules for this loan state that the total rehabilitation cost may not exceed $35,000. The good news? There is no minimum repair cost for this type of rehab loan. Ineligible Projects For FHA Limited 203(k) Mortgages HUD 4000.1 features a list of things 203(k) funds | more...

October 19, 2022

FHA Home Loan Approval And Debt Ratios

By Joe Wallace

How is FHA home loan approval affected by your debt ratio? Your credit qualifications including FICO scores and credit history are very important factors in home loan approval, but the amount of debt you carry is also a factor. Your participating FHA lender must evaluate your monthly debt versus your monthly income to determine if you can realistically afford the mortgage. How does the lender do this? The rules governing this process are found in the FHA loan handbook, HUD 4000.1. It begins by stating that the lender is required to “determine the Borrower’s monthly liabilities by reviewing all debts listed on the credit report, Uniform Residential Loan Application (URLA), and required documentation”. The lender must review all monthly financial obligations but some things may not necessarily be included in | more...

October 17, 2022

House Hunting Advice For First-Time Home Buyers

By Joe Wallace

When you start making plans to work with a realtor, there are some very good things to consider ahead of time. Checklists, online mortgage calculators, and other home-buying tools are only some of the things you’ll want in your house-hunting toolkit when you are ready to become a homeowner. Decide What Your Priorities Are For Your New Home Before filling out FHA home loan paperwork, and long before you decide which real estate agent to work with, you should have an idea of what your main priorities are for your new home. Do you need a home located near a certain school or type of school? Are you looking for someplace quiet and residential and nowhere near a shopping mall, gas station, or movie theater? Some priorities are more important | more...

October 14, 2022

Why You Should Not Apply For An FHA Home Loan And Other Credit At The Same Time

By Bruce Reichstein

Plenty of websites, books, and financial podcasts warn about managing your credit properly during the home loan application process. One bit of advice from many of these sites? Don’t apply for a car loan at the same time or just before a home loan. Don’t apply for any new credit during this time for best results. Why? There are several reasons, one of the most important? That your debt-to-income ratio is negatively affected by any new line of credit and a home loan lender will be required to consider that when deciding whether or not to approve your mortgage loan. The minimum payment required each month on the car loan will be factored in with the rest of your debt, and if you significantly change your debt ratio during the | more...

September 19, 2022

Which Is Better: Conventional Mortgages Or FHA Home Loans?

By Bruce Reichstein

Which is better, a conventional mortgage or an FHA home loan? If you are struggling to make this choice, rising interest rates and home ownership costs might make you look twice at your upfront costs and other expenses associated with each type of mortgage loan. The more forgiving credit requirements and down payment expectations of an FHA mortgage may have you thinking twice about going conventional. When it comes to FICO scores, FHA loans on paper are easier to be approved for than conventional home loans. And while a conventional mortgage could be more affordable over the lifetime of the mortgage, those who need more flexible credit requirements and lower upfront costs may find the FHA mortgage worth considering. There are a few objections to FHA loans. Some are less | more...

September 9, 2022

Article Update: FHA Appraisal Refunds

By Joe Wallace

Back in 2012, we wrote an article discussing the FHA appraisal process, and whether it’s possible to get a refund from an appraiser if a property is not approved for an FHA mortgage or when the home’s appraised value comes back different than expected. When we addressed this question, which we are asked from time to time, the going advice was that in cases where a buyer disagrees with the outcome of the appraisal, the fee must still be paid. What’s the reality in 2022? When you find a house you want to buy with an FHA home loan, there must be an appraisal. This process is non-negotiable; the appraisal helps to determine the FHA loan amount which is based on the fair market value of the home, not necessarily | more...