Articles Tagged With: Loan Term

March 17, 2016

FHA Loan Advice: Know Your Costs, Interest Rates

We give a lot of advice both here and in our comments section about FHA home loans. And there’s a lot to give; FHA loan rules cover everything from the acceptable minimum condition of the home to a borrower’s credit requirements for maximum financing. But what does the FHA itself, as a government agency, say about the home buying process? Our publication is not associated with the FHA in any way, and what follows is the result of our research and examination of FHA-published material. What we have found is definitely information a potential borrower should consider during the planning stages of a new home loan or refinance loan. An FHA publication titled, Looking For The Best Mortgage has some excellent overall advice for the borrower starting with the old | more...

January 14, 2016

FHA HECM Loan Facts

By Joe Wallace

The FHA single-family loan program includes reverse mortgages–a loan program where a borrower can apply for a loan that requires no monthly payments, offers cash back to the borrower, and is based on the value and equity in the home. If you are looking for a reverse mortgage, the FHA program might be just what you need. Here are some basic facts about the FHA reverse mortgage loan option: FACT: FHA reverse mortgages are known as Home Equity Conversion Mortgages or HECM for short. These two terms refer to the same thing when it comes to FHA reverse mortgages. FACT: FHA HECM loans are for borrowers aged 62 or older who either own their home outright or are very close to doing so. HECM loans are declared due when the | more...

December 7, 2015

FHA Refinance Loans: A Checklist

By Joe Wallace

Are you thinking about refinancing your home loan? There are many things you will want to consider in the planning stages that can help speed you to the application stage of your new loan. Here are some basics you should consider when saving and planning to refinance: The Type of Refinancing You Need Are you searching for a Streamline Refinance for your existing FHA mortgage loan? Or so you need to refinance from a conventional or other non-FHA mortgage into an FHA home loan? Do you want cash out? Or do you just need lower payments? All these factors are important to consider when choosing the FHA loan product that is right for you. An FHA Streamline has different rules and requirements than an FHA Cash-Out Refinancing loan. Know the | more...

August 7, 2015

FHA Loan Fees Which Are Not Considered Closing Costs

By Joe Wallace

There are a variety of fees and expenses associated with FHA home loans; typical costs that the borrower should be saving up for during the planning stages of a new home loan. The FHA requires a minimum 3.5% down payment, for example, and that down payment is considered separate from the borrower’s closing costs. And then there are expenses which are not considered part of the down payment OR closing costs. The FHA loan rules found in HUD 4155.2 at the time of this writing explain these costs. Discount points (a prepaid amount designed to lower the interest interest rate) are included in such expenses–not a down payment, not a closing cost. Chapter Six of HUD 4155.2 describes discount points as follows: “Discount points charged by the lender on a | more...

July 6, 2015

FHA Loan Interest Rates: The Rules For Lock-Ins

By Joe Wallace

Since we got a recent reader question about the rules and regulations about FHA loan interest rate locks, it seemed like a good time to review the FHA mortgage loan rules that govern them. At the time of this writing, the FHA and HUD are getting ready to transition to a new volume of rules covering FHA Single Family mortgage loan transactions, HUD 4001.1. Until the effective date in September 2015, the previously used references are valid. In general many of the single family loan rules may be the same, but there have been plenty of changes and updates to certain policies. The information below is still valid at the time of this writing. FHA loan rules state, “Under all currently active FHA single family mortgage insurance programs, the borrower | more...

What happens to my FHA loan in a natural disaster?

April 29, 2015

FHA Streamline Refinance Loans: A Reader Question

By Joe Wallace

A reader asks, “If I need to refinance to remove my ex-husband from my mortgage loan, and he has already signed the quit-claim and put the mortgage in my name only. Do I have to meet the normal 5% payment reduction requirement for the Net Tangible Benefit?” The borrower does not specify whether the refinance loan is an FHA Streamline Refinance loan or a cash out loan, but since this comment was on a post we did on FHA Streamline refinance loans, we’ll assume that’s the loan being asked about. FHA Streamline loans do require a “net tangible benefit” to the borrower as described in HUD 4155.1. That benefit could be a lower monthly payment, lower interest rates, or the fact that the borrower is refinancing from an Adjustable Rate | more...

March 18, 2015

FHA Refinance Loans With An Appraisal: Some Basics

By Joe Wallace

If you have never applied for an FHA appraisal-required refinance loan before, you probably have plenty of questions about program basics. How long can the new loan be? Can I re-use a previous appraisal? What is the maximum loan amount? The answers to these questions can be found in HUD 4155.1 Chapter Three Section A, which informs us that the longest loan term for any refinance with an appraisal is 30 years. Chapter Three also adds: “The maximum term of a streamline refinance without an appraisal is limited to the lesser of • the remaining term of the existing mortgage, plus 12 years, or • 30 years.” The appraisal question is also answered here, with FHA loan rules stating that FHA appraisals (for existing properties) are good for six months, | more...

September 29, 2014

FHA Loan Terms and Payment Plans: A Reader Question

By Joe Wallace

A reader asks, “I am trying to relocate to a new home with my three small children and would like to use an FHA loan to purchase it. I was told about a 40 yr note with yearly payments? Is there such a program? I am currently enrolled in school, working towards my bachelor’s degree in nursing. I have access to some funding for a down payment, approx $30,000. I have also located a home that I want to purchase. 3 bed, 3 bath on 25 acres, approx value of $89,900. Can someone please help me find the right loan to purchase this home? FHA loans have specific rules about the term of the loan. According to HUD 4155.1, under the section titled Maximum Loan Limits, Mortgage Amounts and Mortgage | more...

March 11, 2014

FHA Refinance Loan Basics: Purposes of the Loan, Limits, and Loan Terms

By Joe Wallace

FHA loan rules permit the refinance of mortgage loans under a variety of circumstances. Borrowers applying for some types of FHA refinancing can go from conventional to FHA, from adjustable rate mortgages to fixed rate, and for those with existing FHA loans, an FHA-to-FHA streamline refinance is also possible. Chapter Three of HUD 4155.1 is where the basic rules covering refinance transactions can be found. Chapter Three begins by stating the basic purposes of a refinance loan which include the following: “A refinance transaction is used to pay off an existing real estate debt with the proceeds of a new mortgage • for borrower(s) with legal title, and • on the same property. Note: The borrower is eligible to refinance the loan, as long as he/she has legal title, even | more...

April 30, 2013

FHA Loan Answers: How Long Is An FHA Loan?

By Joe Wallace

One common FHA loan question is fairly simple and straightforward; how long can an FHA loan be? In general, FHA loans are available for 15 or 30 year terms. FHA loan rules as spelled out in HUD 4155.1 state that there is a maximum loan term–one that depends on the type of transaction and other factors. “The maximum mortgage term may not exceed 30 years from the date that amortization begins. In the case of adjustable rate mortgages (ARMs), the term must be for 30 years. FHA does not require that loan terms be in five year multiples.” FHA loan rules add, “Some programs require a shorter term, including certain streamline refinances made without appraisals.” For FHA Streamline Refinances made without an appraisal, FHA loan rules state, “The streamline refinance | more...