Articles Tagged With: Loan Term

October 3, 2011

FHA Mortgage Insurance Premiums

Earlier in 2011 we reported a change to FHA Mortgage Insurance Premiums–according to FHA Mortgagee Letter 11-10, a scheduled increase in Annual Mortgage Insurance Premiums took effect for all FHA loan case numbers dated on or after April 18th 2011. The change was an increase in the annual premium for FHA loan terms of: –Greater than 15 years–Equal to or less than 15 years For FHA mortgage loans with greater than 15 year terms, the new MIP amount depends on the down payment. If the down payment is equal to or greater than 5%, the new Annual Premium is 110 basis points (bps). If the down payment is less than 5%, the new Annual Premium is 115 basis points (bps). FHA instructions for loans equal to or less than 15 | more...

September 12, 2011

The Features of FHA Home Loans

By Joe Wallace

The FHA loan program has helped first-time home buyers and other house hunters since it started in 1934. FHA insured loans are designed to help people get affordable home loans featuring low down payment requirements and affordable closing costs. The program is designed with credit requirements far more lenient than many conventional home loan programs on the market today. Some borrowers turn to FHA-insured loans because they discover the down payments, interest rates and other terms on conventional mortgages ask too much or are too restrictive. Some borrowers worry their credit score or history isn’t good enough to get the most competitive rates. In these cases, FHA mortgages are definitely worth a look and can be a means to home ownership for borrowers who might not qualify for a conventional | more...

July 21, 2011

FHA Streamline Refinance Loans and Mortgage Term Reductions

By Joe Wallace

FHA loans are available with terms of 15 and 30 years. Borrowers can choose shorter loans with higher payments, or they can choose a longer loan term and lower payments depending on what their financial priorities are. The shorter-term loan with higher monthly payments can result in less money being paid in interest over the lifetime of the loan, but for many borrowers the higher monthly obligation isn’t as affordable. Choosing the right loan term for your financial goals and monthly budget can be tricky. Some choose the longer loan term to maintain their monthly budget, but as people progress in their careers it may be more affordable later to take on those higher payments. Some decide simply to pay more than the monthly amount due, but others may seek | more...

July 7, 2011

FHA Loans: What’s The Minimum Credit Score?

By Joe Wallace

Applying for a home loan can be daunting; some people feel intimidated by the home loan process because of past credit mistakes they’ve made and assume they aren’t eligible for a home loan because of those mistakes. But is it safe to assume that a few problems in the past will keep you from becoming a home owner? Not necessarily. According to FHA rules, what makes a borrower eligible for an FHA mortgage is a combination of credit history, steady employment and your debt-to-income ratio, and the record of reliable payments in the last 12 to 24 months. The more reliable you are as a bill payer, the better chance you have of being approved for an FHA home loan. What do the FHA loan rules say about credit scores | more...

June 28, 2011

The Different Types of FHA Home Loans

By Joe Wallace

There are many different types of FHA insured home loans to choose from. Buying a home or refinancing one isn’t a one-size-fits-all process, and FHA guaranteed loans come in a variety of types to accommodate the various needs different house hunters or current home owners bring to the lender. The two most basic types of FHA home loans are new purchase loans and refinancing loans. New purchase FHA loans, by name alone, may seem to indicate that these loans are intended only for new construction houses, but new purchase simply refers to the type of transaction (a “new to you” home purchase), not the age or condition of the property itself. FHA refinancing is, as the name implies, a home loan intended to pay off an old home loan and | more...

May 13, 2011

FHA Loans For Manufactured Homes: Which Manufactured Homes Are Eligible?

By Joe Wallace

The rules for FHA insured loans have long included manufactured homes; the FHA recognizes that not all borrowers need or want a tradition suburban home, condo, or multi-family unit. Manufactured homes have their own unique requirements in order to be approved for FHA mortgages, and in order to be eligible for FHA financing, the home must meet these requirements to the letter unless otherwise specified in FHA loan requirements. For starters, a manufactured home is not eligible for an FHA insured loan unless it has at least 400 square feet of floor space. It must be built upon and remain on a permanent chassis and foundation. That foundation must be considered permanent and meet FHA specifications. The home must be classified as real estate, which goes back to the permanent | more...

May 3, 2011

FHA Mortgage Insurance Premiums–When Do They Stop?

By Joe Wallace

FHA loan applicants have many things to budget and plan for. Mortgage insurance is one of the costs associated with a home loan, and FHA loan applicants are required to pay an annual mortgage insurance premium. The reason for mortgage insurance is to protect the lender against a loss associated with a default/foreclosure on the home. An FHA borrower making a down payment of less than 20% is required to carry mortgage insurance. But borrowers should know that mortgage insurance isn’t required for the entire term of the loan. The insurance is automatically terminated based on the nature of the loan, the length of the loan term and the Loan to Value ratio or LTV. According to the FHA official site, for all FHA mortgages closed after January 1, 2001, | more...

April 28, 2011

FHA LOANS: HECM Loan Terms and Conditions

By Joe Wallace

The FHA Home Equity Conversion Mortgage or HECM loan, also known as a reverse mortgage, has terms and conditions that must be clearly understood in order to get the most out of the loan. HECM loans have strict rules that must be followed in order to avoid violating the terms and conditions, which is why the FHA requires HECM loan borrowers to get counseling on reverse mortgages before they can be approved for an FHA HECM loan. The reason understanding these terms and conditions are so important has much to do with the nature of the loan itself–no payments are due from the borrower at any time unless he or she dies or sells the home. But if the borrower violates the terms of the loan, the lender is able | more...

April 26, 2011

Rules Governing FHA Loan Fees

By Joe Wallace

In recent blog posts we’ve discussed the fact that the FHA does not set interest rates on the loans it insures. Forces in the marketplace already determine the state of housing market interest, for the FHA to get involved in setting rates for FHA-guaranteed loans would involve a whole new layer of effort and study to keep up with ever-changing market conditions. Instead, the FHA allows lenders and borrowers to negotiate the rates. What the FHA does do is to control the fees and charges associated with an FHA loan. FHA rules state fees and costs must be “reasonable and customary”. For example, FHA rules allow the lender to collect an origination fee. For loans through the end of 2009, the fee was limited to one percent. The one percent | more...

April 18, 2011

FHA Loans: Facts About the Good Faith Estimate

By Joe Wallace

The HUD GFE Good Faith Estimate is paperwork the borrower is given as part of the the FHA loan process. This is a very important document–it explains the nature of the FHA loan including potential interest rate increases, the amount of monthly mortgage payments that could increase as a result, and plenty of other data crucial to making a budget for the new mortgage and other living expenses. The form states, “This GFE gives you an estimate of your settlement charges and loan terms if you are approved for this loan. For more information, see HUD