Articles Tagged With: Loan Term

March 27, 2013

FHA Loan Answers: How Long Is An FHA Mortgage?

A common question in any home loan situation is, “How long is my mortgage?” This depends greatly on the type of loan you apply for, the term you agree upon, and how much you pay each month over the lifetime of the loan. In general, FHA mortgages are either 15-year or 30-year loans. The maximum amount of time you can be legally obligated to the original new purchase FHA home loan is 30 years. According to the FHA official site, “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.” Some types of refinancing (certain FHA Streamline Refinances | more...

December 13, 2012

FHA Loan Rules For Interest Rate Lock-Ins

By Joe Wallace

Many people are considering the purchase of a new home lately since, at the time of this writing, mortgage loan interest rates are at or near historically low amounts. Borrowers who might have wondered whether it was a good idea to commit to a home loan a year or two ago are taking another look due to these low rates. When a borrower decides to commit to an FHA home loan, they fill out an application and work with a lender to get approved for the mortgage. Assuming the loan application is approved and the loan will move forward, the borrower and lender may agree on an interest rate and commit to that rate–something known as an interest rate lock-in. Coming to a mutual agreement on that interest rate is | more...

December 7, 2012

FHA Refinance Loan Options

By Joe Wallace

Recent news headlines related to “fiscal cliff” include warnings of possible tax hikes, a loss of (or cap on) mortgage loan interest rate tax breaks and other bad-news type possibilities. Those headlines make some homeowners seriously think about refinancing their FHA mortgages–getting into lower interest rates and/or lower payments to offset the higher costs of owning a home should the fiscal cliff issue enter a worst-case scenario. While no homeowner should rush into such a decision, those who are ready to commit should know their FHA refinance loan options. According to the FHA official site, borrowers with FHA or conventional home loans have the following choices as described in HUD 4155.1 Chapter Three: “FHA insures several different types of refinance transactions, including –Streamline refinances of existing FHA-insured mortgages made with | more...

October 11, 2012

FHA Loan Reader Question: Title I Loans For Remodeling/Rehab

By Joe Wallace

A reader asks, “I am interested in borrowing a small amt. of money for remodeling my home. Is there any way I can qualify for an FHA loan for this purpose? I have never had bankruptcy, never missed a payment, never defaulted on any loan…” Something called a Title I Home Improvement loans are described on HUD.gov as a way to do just what this reader question describes. According to the official site on the page titled “About Title I Home Improvement Loans” you’ll find the following description: “HUD insures private lenders against loss on property improvement loans they make. The applicant must have a good credit history and the ability to repay the loan in regular monthly payments. Both large and small improvements can be financed. Search HUD’s list | more...

October 2, 2012

Is a Borrower Ever Automatically Ineligible for an FHA Home Loan?

By Joe Wallace

FHA home loans are designed to help eligible borrowers get into affordable mortgages. The general credit qualifying criteria and loan terms can be far more lenient than some conventional mortgages, and the FHA loan program has helped many who could not qualify for conventional loans because of large down payment requirements or other terms. But is there a time when a potential FHA loan applicant is automatically ineligible for an FHA mortgage? According to the FHA, the answer is yes. For the purposes of this blog post, we aren’t talking about those who have experienced a foreclosure or who have filed bankruptcy; after all, there is only a mandatory waiting period–the seasoning period–that must be waited out until such borrowers are eligible to apply again. They haven’t been forbidden from | more...

August 15, 2012

FHA ARM Loans: Basic Rules For Interest Rates and Disclosure

By Joe Wallace

Did you know the FHA offers Adjustable Rate Mortgages (ARM loans) for qualified borrowers? These loans feature lower introductory rates for at least one year, with interest rate adjustments specified over a period of time agreed upon between the borrower and lender. FHA ARM loans may feature an introductory rate fixed for one year or up to as many as 10 years depending on the terms of the loan. When the introductory period is over, the loan’s interest rate may be adjusted between one and two interest rate points with an interest rate cap over the lifetime of the loan of up to six points, depending on the loan. According to FHA.gov, “The lender and borrower negotiate the initial interest rate and margin. The margin must be constant for the | more...

February 2, 2012

FHA Loan Rules: Minimum Cash Investment

By Joe Wallace

Some FHA loan terms and jargon can be confusing for the first-time borrower. For example, some readers want to know what the FHA means by “minimum cash investment”. This phrase is basically another way of stating the term, “down payment” and refers to how much money down the borrower will pay. According to FHA loan rules as stated in HUD 4155.1 Chapter Two; “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

January 10, 2012

FHA Home Loan Interest Rates

By Joe Wallace

The FHA loan rulebook provides lenders with a set of guidelines and requirements for FHA loans. One important section of those rules, as found in HUDdoc 4155.1, has to do with interest rates and something called interest rate lock-in periods. The government does not set the interest rates for FHA loans. According to the FHA loan rules, “Under all currently active FHA single family mortgage insurance programs, the borrower and the lender negotiate the interest rate and any discount points.” But the fact that those rates and points are negotiable does not mean interest rates are not regulated by FHA loan rules–once those rates are agreed upon, the lender must abide by the rules for the FHA loan program. For example, the amount of time the lender is bound to | more...

October 13, 2011

FHA Title I Home Improvement Loans

By Joe Wallace

If you explore FHA home loan options, you’ll find a variety of them–there are loans for new purchase mortgages, but also options for energy efficient mortgages, home equity conversion loans, rehab loans, and something called the FHA Title I Home Improvement loan. Title I loans are used for repair, alteration, or site improvements and can be used together with a 203k Rehabilitation Mortgage if needed. Title I loans for a single family home can be approved for amounts up to $25,000 for qualified borrowers. Applicants aren’t required to ask for the maximum amount; according to the FHA official site, “Both large and small improvements can be financed.” FHA rules also state, “Any loan over $7,500 must be secured by a mortgage or deed of trust on the property.” As with | more...

October 5, 2011

FHA Loans and the Borrower’s Rights

By Joe Wallace

FHA mortgages have a number of features which make them more advantageous for qualified borrowers than many conventional loans. A low down payment requirement is one of those advantages, as is more forgiving requirements for credit history. Contrary to what some believe, there is also no maximum income limit for a typical single-family FHA home loan. In addition to these advantages, there are also a list of rights all borrowers have that protect them in the loan application and purchasing process. Did you know all borrowers have the right to know which fees are refundable and which are not should the loan agreement be canceled? You have the right to have these fees explained to you before you commit. Home buyers also have the right to be fully informed when | more...