Articles Tagged With: Mortgage Closing

Is U.S. Citizenship Required For An FHA One-Time Close Construction Loan?

June 26, 2017

What Is The FHA One-Time Close Construction Program? Part One

What is the FHA One-Time Close / Single-close construction program? Who is it meant for? These are questions with important answers for potential FHA borrowers who are interested in applying for an FHA mortgage to have property built for them instead of buying an existing construction property. One-Time close mortgages are construction loans that differ from standard construction loans in that there is a single closing date for the loan rather than the traditional two closing dates. The borrower saves money on a one-time close loan thanks to the single loan for construction costs, land purchase, and the typical expenses associated with a home loan. These savings work in ways you might not expect. One advantage of this type of construction loan is that the lender and borrower arrive at | more...

June 14, 2017

Closing Costs And Earnest Money For FHA Loans

By Joe Wallace

In a recent post we discussed FHA loan down payments and how the lender is required to verify that down payment money is coming from acceptable sources. Did you know the lender is also required to verify the sources of earnest money and funds to pay closing costs? It’s true-FHA home loan rules include requirements that these funds comply with FHA loan rules. For example, if your earnest money comes to you in the form of a gift, those gift funds must meet the rules and requirements of the FHA Loan Handbook HUD 4000.1 section titled Gifts (Personal and Equity): “Gifts refer to the contributions of cash or equity with no expectation of repayment.” This means your earnest money gift must never carry any strings attached. But that isn’t all-the | more...

May 31, 2017

After The FHA Loan Closes: FHA Loan Reader Questions

By Bruce Reichstein

A reader got in touch recently to ask an FHA loan question about the disposition of the property once the loan has closed. “After receiving the loan, are there any regulations on putting two other mobile homes on the property? They will not be on a permanent foundation. We are currently buying 15 acres of land in Texas.” FHA loan rules are clear about the status of a mobile or manufactured home that is purchased with an FHA mortgage loan-all such property types must meet FHA minimum standards and be affixed to a permanent foundation as a condition of loan approval. However, the FHA Single Family Loan Handbook, HUD 4000.1, does not address the condition of add-ons, improvements, or other modifications that happen after the loan has closed. A borrower | more...

May 17, 2017

FHA Appraisal Questions: Defective Conditions

By Joe Wallace

A reader asks a question about FHA appraisal issues: “Bought a house that was supposedly totally renovated about a 1.5 months ago. Finding out about major issues and violations in the house. There were a lot of concealed things hidden…found they had unlicensed contractors.” “Didn’t have the money to do a regular home inspection. People were saying FHA does their own home inspection to make sure house is safe…problems with windows plumbing illegal hookup with water main electrical box etc. Have to make a payment to mortgage plus fighting with seller to get licensed contractors…please tell me why didn’t FHA see these issues.” FHA appraisals must never be confused with a home inspection. The FHA and HUD warn borrowers of this in a document found on the FHA/HUD official site | more...

April 7, 2017

FHA Loan Rules: Borrowers, Co-Borrowers, Co-Signers

By Joe Wallace

Do you know what the FHA loan rules are for borrowers, co-borrowers, and/or co-signers? What are the requirements for each and how is your lender required to proceed with each? The FHA home loan rule book for single family mortgages, reverse mortgages, and refinance loans is HUD 4000.1 It instructs the lender that borrowers have an occupancy requirement-the borrower must agree to take ownership of the home and use it as her or his primary residence after loan closing. Usually the borrower will have to move in within 60 days of closing. HUD 4000.1 also tells the lender that borrowers may only purchase homes with FHA loans within the United States or its’ territories. Purchase of non-U.S. real estate is not permitted with an FHA mortgage. All parties to be | more...

What You Need To Know About Your FHA Home Loan

February 28, 2017

FHA Loan Rules On Occupancy And Second Homes

By Bruce Reichstein

Occupancy is a key issue for FHA single family home loans. When you purchase a residence with an FHA mortgage, one of the requirements loan approval is conditional upon is that the borrower is expected to occupy the home as the primary residence, usually within 60 days of the loan closing. Occupancy is required for both new purchase and FHA cash-out refinancing loans. That’s one reason why FHA loan rules in HUD 4000.1 specify that FHA mortgages can’t be used for vacation properties, timeshares, etc. HUD 4000.1 states clearly, on page 135, the “standard for owner occupancy” which includes the following: “At least one Borrower must occupy the Property within 60 Days of signing the security instrument and intend to continue occupancy for at least one year. 203(k) Rehabilitation products | more...

February 1, 2017

FHA Refinancing: Your Options

By Joe Wallace

There are many reasons to consider an FHA refinancing loan. Some borrowers want to refinance out of an adjustable rate mortgage, others want to refinance out of a more expensive conventional mortgage, while others still want to take out some of the cash value in their home. Do you know what your FHA refinancing loan options are? According to HUD 4000.1, the rule book for all FHA single-family mortgages, there are a variety of options: 1. No cash-out refinances of FHA-insured and non FHA-insured Mortgages. This type of FHA refinancing is meant to pay off existing liens. These include: Rate and Term refinance, Simple Refinance, and Streamline Refinance. 2. Cash-out refinances. 3. Refinances of non FHA-insured Mortgages are available for qualified Borrowers in negative equity positions (Short Refi). 4. Refinances | more...

January 3, 2017

FHA Mortgages: Loan Basics For 2017

By Joe Wallace

For those who are weighing their real estate options in 2017, an FHA home loan can be an important option. Compare the down payment and interest rates on FHA mortgages with their conventional counterparts and it’s easy to see why many borrowers opt for an FHA mortgage. FHA loans, like most mortgage loan programs (with the exception of VA home loans, which are in general available only to qualifying military members), require a down payment which is usually 3.5% of the adjusted value of the property. Your down payment is required above and beyond other closing costs, mortgage insurance, etc. and must come from approved sources such as savings/checking accounts, the proceeds from cashed-in investments, cash saved at home, etc. Your down payment cannot come from payday loans, credit card | more...

October 20, 2016

FHA Requirements, Occupancy, and Business Loans

By Bruce Reichstein

Here’s an example of a question we get fairly often about the intended purposes of FHA mortgages: “I am interested in investing in properties I intend to flip and rent out. I already own a primary residence, can I use a FHA loan to buy a second home for business? FHA loan rules are specific when it comes to flipping a home, starting with the FHA’s definition of the practice as found in HUD 4000.1: “Property Flipping is indicative of a practice whereby recently acquired Property is resold for a considerable profit with an artificially inflated value, often abetted by a Mortgagees collusion with an Appraiser…Property Flipping refers to the purchase and subsequent resale of a Property in a short period of time..” We are not implying that the reader | more...

FHA Loans And Natural Disasters: What You Should Know

October 5, 2016

Cash To Close: Investments, Private Savings Clubs

By Joe Wallace

In our last blog post we discussed FHA loan closing costs and down payments-specifically the rules found in HUD 4000.1 that governs the sources of the funds for cash to close (down payments and closing costs). The lender is required to verify the source of all funds for down payments and closing costs, and the procedure can vary depending on the source of the funds, lender standards, state law, etc. Last time we examined the rules for funds that come from savings and checking accounts, but these aren’t the only types of sourcing options. For example, cash to close may come from investments such as stocks or bonds, or money saved up in private savings clubs. HUD 4000.1 instructs the lender on how to proceed with these types of sources. | more...