Articles Tagged With: First-time Home Buyer

January 27, 2022

FHA Home Loan Approval Problems: New Credit Applications

You may have heard advice about seeking new credit while you are in the home loan process. Much of this advice is definitely applicable. Anyone who advises you NOT to apply for new credit once you have started your home loan journey is thinking with your best interests in mind, but what is it about this advice that makes it so critical? A lender doesn’t pull your credit reports just once during the home loan process and if your lender sees new information that potentially changes your ability to qualify for the mortgage it may be necessary to re-approve you for the loan. And that’s just the presence of new credit in your report. What about how a new line of credit potentially affects your debt-to-income ratio? When you apply | more...

January 25, 2022

FHA Loans: Do Appraisals Transfer When Switching Lenders?

By Bruce Reichstein

Sometimes a home loan goes smoothly from start to finish. Other times, it may not. In some cases, a borrower may choose not to purchase a particular home after all and continue looking. In others, a borrower may be happy with the home, but not so pleased with the lender. In situations where a borrower wants to switch lenders, is it possible to transfer an FHA appraisal to the new lender? This is a not-so-common question, but an important one for those who need to know. What does HUD 4000.1 have to say about appraisal transfers? Quite a bit, it turns out. From HUD 4000.1: “In cases where a Borrower has switched Mortgagees, the first Mortgagee must, at the Borrowers request, transfer the appraisal to the second Mortgagee within five | more...

January 21, 2022

HUD Announces Disaster Relief For Alaska, Missouri, And Tennessee

By Joe Wallace

The U.S. Department of Housing and Urban Development has announced federal disaster assistance to three states affected by natural disasters in 2021 and in 2022. Certain counties in Tennessee, Alaska, and Missouri are now eligible for federal disaster relief, FHA foreclosure moratoriums, and more. Tennessee was affected by severe storms, high winds, and tornadoes from December 10 to December 11, 2021; in January of 2022 the President issued a major disaster declaration for the following Tennessee counties: Cheatham Davidson Dickson Gibson Henderson Henry Lake Obion Stewart Sumner Weakley Wilson The President also announced a major disaster declaration for portions of Alaska affected by severe storms, high winds, floods, landslides, and mudslides from October 29 to November 1, 2021. In January 2022 the President declared the Kenai Peninsula Borough a major | more...

January 19, 2022

Is A Second FHA Loan Possible?

By Joe Wallace

Is it possible for borrowers to apply for second FHA loans, resulting in paying on two mortgages at once? Here is a variation on a common reader question about this issue: “I relocated to another state over 400 miles away. Will I be able to get an FHA loan even though I still own my first home?” There’s no one single answer to a question like this. Aside from FHA loan rules, a borrower’s credit rating, loan repayment history, and debt-to-income ratio may all play a part in whether a lender is able to approve or deny an FHA loan. In cases like these, one of the most important factors would be (all other considerations aside) focused on the borrower’s debt-to-income ratio. With an existing mortgage payment, will the borrower | more...

January 12, 2022

Buying A Home: Credit Questions And More

By Joe Wallace

There are plenty of questions first-time buyers ask about home loans and the credit requirements you need to get the best deal on your FHA mortgage. Here are some common questions you should know the answers to: I Have Multiple Credit Scores. Which One Gets Used? One of the more potentially confusing things to a new borrower? FICO scores. Most consumers will have three FICO scores, they may not match, and the lender may choose your middle score as “the one”. In cases where you only have two FICO scores, the lower one may be used. If you worry about FICO scores, be sure to take early steps to raise the score before applying for the loan. Start as early as possible and work on raising your scores by paying | more...

January 11, 2022

HUD Announces Disaster Relief For Counties In Washington State

By Joe Wallace

The U.S. Department of Housing and Urban Development has announced federal disaster relief for certain counties in Washington State affected by natural disasters late in 2021. The following counties have been declared federal disaster areas: Clallam Skagit Whatcom That is in addition to federal disaster areas for the Lummi Nation, Nooksack Indian Tribe, and Quileute Tribe in Washington. The relief is intended to “supplement state, tribal, and local recovery efforts in the areas affected by flooding and mudslides” from November 13 to November 15 in 2021. If you live in any of the affected counties or tribal areas mentioned above, contact your loan officer immediately and ask your lender about the following relief and foreclosure prevention remedies for those with FHA mortgages: Immediate Foreclosure Relief In federal disaster areas, there | more...

January 10, 2022

Buying Your Very First Home With An FHA Mortgage

By Joe Wallace

If you are buying your first home, published reports say you aren’t alone. In December of 2021, a Marketwatch article noted that in 2021, the number of first-time homebuyers increased from 31% to 34%. That information comes via the National Association of Realtors, which also notes that historically, some 40% of buyers have traditionally been first-timers. Do you need a first home or starter home? Those who buy with FHA mortgages are in a good position to buy thanks to lower down payment requirements–only 3.5% for those who financially qualify. Lower down payments can help in ways some don’t expect–such as having more money to pay closing costs and other expenses related to buying a home. Down payment assistance programs in your local area may be able to offset the | more...

January 7, 2022

FHA Home Loans: The Escape Clause

By Bruce Reichstein

Of course it’s not formally known as the “escape clause” but first-time homebuyers should know about the FHA home loan rules that govern what happens if the appraised value of the home comes in lower than the asking price of the real estate. HUD 4000.1 instructs the lender that a clause must be inserted into any legally binding commitment to purchase the home that guarantees that the borrower does not forfeit earnest money or retain an obligation to purchase the property if the appraisal is lower than the sale price. The wording of such a clause is suggested in HUD 4000.1 (page 117) as something to this effect: “It is expressly agreed that notwithstanding any other provisions of this contract, the purchaser shall not be obligated to complete the purchase | more...

January 6, 2022

Getting A Lower Monthly Payment With An FHA Mortgage

By Bruce Reichstein

If you want a lower mortgage rate, refinancing your home loan can help if the interest rates offered to you at the time are more competitive than what you pay under the original home loan. Lower rates can result in lower monthly payments. There are also options to refinance for the express purpose of getting a lower payment but for some, this issue is complicated by an option known as mortgage recasting. When you refinance, you apply for a new loan to replace the old one. The new loan may be for a shorter term or for the same number of years you committed to originally. If you refinance an FHA mortgage using an FHA Streamline Refinance loan, one of the benefits from doing so can be a lower monthly | more...

January 4, 2022

Buying A Home With An FHA Loan In 2022

By Joe Wallace

Do you want to buy a home in 2022? FHA home loan limits are higher in the new year and there are many different options to choose from with the FHA Single-Family Home Loan program. FHA loans are a popular option for borrowers–especially those who may be newcomers to the job market, those with thin credit or non-traditional credit, etc. When researching your home loan options you will learn that some lenders in your housing market may be participating FHA lenders who may also offer other loan options. This is an advantage as you can compare that lender’s options carefully to make the most informed decision about your mortgage. FHA Loan Downpayments FHA loans feature lower downpayments than you might expect, especially if you have heard the myth that you | more...