Articles Tagged With: HUD

June 22, 2011

Why Choose an FHA Home Loan?

According to the official site at HUD.gov, the FHA loan program has been running since 1934. Designed to help Americans purchase affordable home loans, the FHA insured mortgage loan program features low down payment requirements, low closing costs and more forgiving credit requirements than conventional loans. Many people turn to the FHA loan program because they may not be able to qualify for loans with good interest rates or terms as favorable as those offered by the FHA. Some go directly to the FHA because they don’t feel their credit is good enough to qualify for a conventional mortgage. In many cases, an FHA loan is the best way to realize the dream of home ownership. But how does the FHA make that happen? The FHA mortgage low down payment | more...

June 21, 2011

Facts About FHA Loan Fees

By Joe Wallace

When you apply for an FHA home loan, make the commitment to buy and close the deal, there are a variety of services which must be paid for as part of the home buying process. Some fees are paid by the borrower, some by the lender, and some by the seller. Do you know what fees you’re responsible for as a borrower taking out an FHA mortgage? FHA loan fees the borrower must pay include a loan origination fee, which includes payment for the cost of doing business with your chosen lender. The buyer is also responsible for any title search and examination fees, plus legal fees where applicable. For some home sales with an FHA loan, the sellers may agree to pay the legal fees–part of an incentive to | more...

June 20, 2011

FHA Loans and Rehab Grants

By Joe Wallace

One frequently asked question about FHA loans is about FHA grants for home repair. Does the FHA provide grant money for home buyers or FHA borrowers to repair or fix up a home? The short answer is no. While you may read FHA press releases such as a recent item about the FHA awarding $27 million in “sweat equity grants”, (HUD Press Release No. 11-122), it’s important to make the distinction between a grant to

June 16, 2011

Can I Use a Power of Attorney For an FHA Home Loan?

By Joe Wallace

There are many situations where borrowers, co-borrowers or family members might need to use a power of attorney to continue financial arrangements, including an FHA home loan. Some borrowers or their family members, acting on behalf of someone who can’t represent themselves, may furnish a power of attorney (POA) to continue a financial arrangement or give final approval. One popular use for a power of attorney is when a military member is suddenly deployed or sent on a military assignment on short notice. The purchase of a new home shouldn’t be cancelled on account of an important job requirement–if the person is willing to let someone else represent him or her using a power of attorney. When it comes to FHA home loans, the rules state, “A power of attorney | more...

June 14, 2011

FHA Loans: Seller Contributions Vs. Inducements To Purchase

By Joe Wallace

In a tough housing market, house sellers often must include incentives to make their property more attractive to a borrower. In other words, the seller isn’t just putting the home up for sale, there are a few bonuses thrown into the deal such as helping with the cost of pre-paid expenses, paying discount points or other things. Some sellers will throw in some appliances as an incentive, others might offer to furnish a new large screen television, etc. When it comes to FHA loans, there are limits on how much and how far such incentives can go. The seller is not forbidden to offer any incentives, but there’s a difference between a contribution and what the FHA considers “inducements to purchase”. An inducement to purchase, while not illegal, does result | more...

June 13, 2011

FHA Loans and Your Credit Report

By Joe Wallace

Anyone applying for a new line of credit agrees to submit to a credit check, whether for a new car purchase, a credit card account or an FHA home loan. When it comes to FHA loans, the credit history is identified in FHA literature on home loans as “the most useful guide in determining a borrower’s attitude toward credit obligations and predicting a borrower’s future actions.” Simply put, an FHA loan applicant with a record of on-time payments looks like a good credit risk to the lender. But what about those who have had trouble in the past paying on time? When the lender examines your credit history, it’s not a simple case of saying no because the facts and figures show a history of late payments. According to the | more...

June 7, 2011

FHA Reverse Mortgage Loan Counseling Rules

By Joe Wallace

FHA Reverse Mortgages, also known as Home Equity Conversion Mortgages, have unique requirements because of the nature of the loan. HECM loans, which are intended for seniors age 62 and older, require no mortgage payments during the lifetime of the loan. HECM loans are paid off when the borrower dies or chooses to sell the property secured with the reverse mortgage. FHA rules state all HECM applicants must receive counseling to insure they are informed borrowers, fully aware of the responsibilities and requirements of a HECM loan as well as the benefits. This counseling must happen before the borrower commits to a reverse mortgage. According to Section 255(d) of the National Housing Act and FHA regulations found in 24 CFR 206.41, “all prospective Home Equity Conversion Mortgages (HECM) borrowers must | more...

June 3, 2011

The FHA Loan Application and Personal Debt

By Joe Wallace

When applying for an FHA home loan, the borrower is asked to list a variety of personal information including details about open lines of credit, car payments, any previous or current mortgages and other important details. All this data is used by the lender to establish how much debt the borrower has, how adding an FHA mortgage commitment might affect the ability for the borrower to pay, and how much money is coming in versus how much is owed. Good lenders know that debts and income are always changing–they are not fixed or constant. People pay off bills, credit cards and other obligations. They also open up new lines of credit, take on additional debt and increase their levels of financial responsibility. That’s one reason why credit experts advise FHA | more...

June 3, 2011

FHA Loans and Extensions of the Conditional Commitment

By Joe Wallace

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.