Articles Tagged With: Principal and Interest

When Is An FHA Loan Better Than A Conventional Loan?

January 21, 2016

FHA HECM Loan Facts And Questions

In our last blog post we discussed some of the basics about the FHA reverse mortgage loan program known as the Home Equity Conversion Mortgage. Here are some commonly asked questions about the program and the answers you should know: What Are The Property Requirements For An FHA Reverse Mortgage? According to the FHA official site, properties eligible for an FHA reverse mortgage must meet all FHA property standards and flood requirements. The eligible property types are: –Single family home or 2-4 unit home with one unit occupied by the borrower –HUD-approved condominium project –Manufactured home that meets FHA requirements Are Manufactured Homes Eligible For FHA Reverse Mortgages? As mentioned above, FHA loan rules do technically permit HECM loans for mobile homes. However the participating lender may or may not | more...

November 16, 2015

Temporary FHA Guidance Eases Condo Project Approval Requirements

By Bruce Reichstein

The FHA has issued a press release announcing temporary guidance that will make it easier to get a condo project added to the approved list for an FHA mortgage loan. According to HUDNo.15-145, the FHA/HUD, “published new guidelines under its condominium approval process intended to increase affordable housing options for first-time and low- to moderate-income homebuyers. Effective immediately, FHAs temporary guidance will streamline the agencys condominium recertification process and expand the eligibility of acceptable owner-occupied units to include second homes that are not investor-owned.” These new guidelines, the FHA press release says, will be in effect for one year, and will “serve to revise FHAs condominium approval process until the agency can implement a more comprehensive condominium rule change.” The new guidance, issued on the FHA/HUD official site on November | more...

November 9, 2015

Are FHA Loans Permitted For Living Trusts?

By Bruce Reichstein

Here’s a question that doesn’t come up that often, but is still an important aspect of the FHA loan program you might one day need to know: Are FHA home loans available for living trusts? The new FHA single family home loan rules published in HUD 4000.1 address this issue. The rules state: “The Mortgagee may originate a Mortgage for a living trust for a Property held by the living trust, provided the beneficiary of the living trust is a Cosigner and will occupy the Property as their Principal Residence, and the trust provides reasonable means to assure that the Mortgagee will be notified of any changes to the trust, including transfer of beneficial interest and any changes in occupancy status of the Property.” Note the occupancy requirement, which is | more...

October 27, 2015

FHA Mortgage Loans: Late Charges

By Bruce Reichstein

What happens if a borrower misses the deadline for his or her FHA mortgage loan payments? While it’s true that no borrower goes into a home loan planning to have missed or late payments, knowing what happens when the payment is late or missed can be a big help–taking the mystery out of these issues is important, especially for new borrowers. FHA loan rules for late payments are found in HUD 4000.1 Part Three Section A. There, you’ll find a section titled “Late Charges” which begins by defining what the FHA views as a late payment: “Late Charges are charges assessed if a Mortgage Payment is received more than 15 Daysafter the due date.” Furthermore, FHA loan rules in this section state, “The Mortgagee may consider a Borrowers payment late | more...

What happens to my FHA loan in a natural disaster?

August 19, 2015

FHA Loan Rules For Debt-To-Income Ratios Versus “Total Mortgage Amount”

By Bruce Reichstein

In our previous blog post about FHA loans and debt-to-income ratios, we mentioned two calculations the lender makes to determine whether or not an FHA loan applicant can truly afford the mortgage loan. One of those calculations matches the applicant’s total “gross effective income” versus the amount of the total mortgage payment to make that determination. According to HUD 4155.1, Chapter Four, “The relationship of the mortgage payment to income is considered acceptable if the total mortgage payment does not exceed 31% of the gross effective income.” Naturally the FHA does make some exceptions for that 31% cap. “A ratio exceeding 31% may be acceptable only if significant compensating factors, as discussed in HUD 4155.1 4.F.3, are documented and recorded…” and the FHA also permits a higher debt to income | more...

What you should know about FHA 203(h) Loans For Disaster Victims

August 10, 2015

FHA Loan Maximum LTV Amounts

By Bruce Reichstein

In our last blog post we discussed some of the basics about FHA loans, loan-to-value limits, and how certain circumstances might affect the maximum LTV on an FHA mortgage. Normally FHA single-family home loans for new purchases have a maximum LTV of 96.5%, requiring the borrower to make a 3.5% down payment. But FHA loans can have different LTV percentages if certain conditions apply. Homes that are purchased with non-occupying co-borrowers, for example, may require a higher down payment. According to HUD 4155.1 Chapter Two Section B, “A non-occupying borrower transaction involves two or more borrowers where one or more of the borrower(s) will not occupy the property as his/her primary residence. When there are two or more borrowers, but one or more will not occupy the property as his/her | 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 19, 2015

FHA Amends HECM Loan Policy To Help Non-Borrowing Spouses

By Bruce Reichstein

After many changes to FHA Home Equity Conversion Mortgage (HECM) rules, another round of changes has been announced. The FHA HECM loan program has probably changed more in the last year or so than any other single-family FHA loan program, and many of the changes we’re seeing now address important issues related to what happens when the primary borrower dies and/or the HECM loan is about to be declared due in full. According to HUDNo.15-073, the FHA has “issued a revised policy under its Home Equity Conversion Mortgage (HECM) Program giving FHA-approved lenders expanded options to allow eligible non-borrowing spouses the potential to remain in their home following the death of the last surviving borrower.” In 2014 there were changes in FHA HECM policies, “to allow for the deferral of | more...