Articles Tagged With: Mortgage Closing

July 8, 2015

FHA Loan Closing Policies

You found the home you want to purchase with an FHA mortgage, you found a lender and got loan approval. Once the closing date has been set, you’re almost finished with your journey to home ownership. But what are the rules for FHA loan closing? FHA loan policies are spelled out for nearly every single step of the FHA loan process, so it’s no surprise that the FHA loan rulebook HUD 4155.2 would have some guidance for the lender about closing the deal. We find this guidance in Chapter Six, which starts out stating that the lender is responsible for: –resolving all problems regarding title to the real estate –reviewing all documents to ensure compliance with all conditions of the commitment –closing the loan before the expiration of the FHA-issued | more...

July 2, 2015

Mortgage Loan Closing: How Difficult Is It?

By Joe Wallace

Every home loan is different. When you apply for an FHA mortgage, you may experience a variety of circumstances along the way that can affect how simple or difficult it is to get to your closing date. Borrowers who prepare ahead of time, who get pre-purchase counseling, and learn from the mistakes of their fellow house-hunters can make the entire process simpler and easier to deal with. That’s one reason why the FHA has a list of resources on its official site (www.fha.gov) aimed at advising new borrowers, but the FHA and HUD are not the only government agencies that offer such assistance. The Consumer Financial Protection Bureau (CFPB) also has a wealth of resources aimed at helping consumers in general, but they also have a special section for house | more...

What happens to my FHA loan in a natural disaster?

June 25, 2015

FHA Loan Debt To Income Ratios

By Joe Wallace

Are you concerned about your debt to income ratio going into the FHA loan application process? Do you wonder how your chosen FHA lender will view your existing debts and whether debts that are scheduled to be paid off at some point in the near future might affect your FHA loan application? It helps to know what the FHA loan rulebook says about a borrower’s overall credit worthiness. At the time of this writing, the FHA and HUD are preparing to transition to a new FHA loan rulebook, but the previous references still apply until then. On the FHA official site you will find HUD 4155.1, which includes a section in Chapter Four about how the lender is to analyze the borrower’s credit. That section says in part: “When analyzing | more...

June 22, 2015

FHA HECM Loan Changes To Non-Borrowing Spouse Policies

By Bruce Reichstein

Last week we discussed some recent changes to FHA HECM loan policies. There have been a number of updates and changes to FHA HECM loan policy, especially in the areas that affect non-borrowing spouses. If an FHA borrower applies for a Home Equity Conversion Mortgage and has a spouse that is not a fellow FHA borrower, can that spouse remain in the home after the FHA borrower dies? There may be good news for these non-borrowing spouses depending on circumstances and the lender. According to an FHA Mortgagee Letter, HUDNo.15-0753, “Under FHAs revised policy, lenders will be allowed to proceed with submitting claims on HECMs with Eligible Surviving Non-Borrowing Spouses and Case Numbers assigned before August 4, 2014 in accordance with the terms of the mortgagee letter by: –Electing to | more...

June 8, 2015

FHA Appraisals and Loan Approval

By Joe Wallace

When you are ready to commit to buying a home with an FHA mortgage, one of the big steps toward making that happen is the appraisal process. Borrowers sometimes confuse FHA appraisals with a home inspection, but the appraisal is not a complete, top-to-bottom review of the home. A property may be appraised and approved for the loan, but still contain issues unknown to the borrower. That is why a home inspection is so important. How does the appraisal process work? An assigned FHA approved appraiser comes to the home and personally walks through it, noting any obvious defects in workmanship, code compliance issues, and other things that could require attention as a condition of FHA loan approval. Sometimes there are no issues and the home “passes” the FHA appraisal | more...

May 19, 2015

FHA Loan Appraisals: The Foundation

By Joe Wallace

A reader asks, “I am in the process of buying a home using a fha loan. The house that we are buying has a cracked foundation and the seller has already had it repaired and the repair has a lifetime transferable service and warranty. With it having had a repaired foundation will this pass the FHA minimum property standards? We have an appraisal in about a week and I am terrified its going to kill the deal.” Unfortunately it’s impossible to say whether a foundation repair job would bring the foundation up to minimum property requirements or state/local building code. Without inspecting the foundation, giving such a determination would be iffy at best. The important thing to remember is situations like these is that FHA loan standards aren’t the only | more...

May 18, 2015

FHA Loan Debt To Income Ratio Rules: A Reader Question

By Joe Wallace

A reader asks, “I am trying to purchase a house. My loans arent scheduled to begin repayment until Nov, of 2016, well over 12 months from now. I am currently enrolled. If you factor in what my loan payment will be, I am at a 46% debt/income ratio, if not, I am under the 41% line. My question is: Will my student loans count toward the debt/income ratio, even though I dont have to start paying them for another 18 months or so?” FHA loan rules in HUD 4155.1 Chapter Four, Section C addresses the student loan debt topic, as follows; “Debt payments such as a student loan or balloon note scheduled to begin or come due within 12 months of the mortgage loan closing must be included by the | more...

May 16, 2015

FHA Loan Occupancy Rules: A Reader Question

By Bruce Reichstein

A reader asks, “Is there a time requirement of the purchaser for moving into a recently purchased home with an FHA loan? Also, can the purchaser have family members move into the recently purchased home (FHA loan) instead of the purchaser?” In general, FHA loan rules require the borrower to the an owner-occupier. FHA single family home loans are for principal residences only, so the borrower must certify that he or she is buying a home for personal use. Additionally there is an occupancy requirement–FHA loan rules state the borrower must move into the home and use it as the primary residence within two months of the loan closing date. This information is found in HUD 4155.1, Chapter Four Section B, titled, “Eligibility Requirements for Principal Residences”. It begins by | more...

May 6, 2015

FHA Loans And Interest Rate Trends: The Interest Rate Lock

By Joe Wallace

FHA home loans, like their conventional mortgage counterparts, feature interest rates that must be negotiated between the borrower and the lender. HUD 4155.1 Chapter One verifies this, stating: “Under all currently active FHA single family mortgage insurance programs, the borrower and the lender negotiate the interest rate and any discount points”. In recent days at the time of this writing, FHA and conventional mortgage rates have been in a state of flux, moving higher due to upward pressure from overseas economic developments and other factors. FHA borrowers may wonder how they might be protected from further increases in mortgage loan rates, should they occur, once they have committed to an FHA home loan. That is where something called the interest rate lock comes into play. The lender and borrower can | more...

April 21, 2015

FHA Loan Closing Costs

By Joe Wallace

One common question asked about FHA home loans involves closing costs. Many FHA borrowers want to know how much to expect in the form of closing costs, but the simple answer to these question is, “it all depends”. Depending on what? No two housing markets are the same, and no two lenders are exactly the same either. The amount of closing costs you have to pay will vary based on these factors plus how state law may affect your transaction, possible property tax issues, how much is charged in your local area for certain services rendered, etc. Cost of services may vary, but the FHA has built in some protections for the borrower when it comes to those charges. HUD 4155.2 Chapter Six has some things to say about closing | more...