Articles Tagged With: Property Taxes

May 5, 2015

Are You Ready For An FHA Home Loan?

If you are considering an FHA home loan, are you ready to fill out the paperwork? Here are some important questions to ask if you are considering applying in the near future: What’s My Credit Score? If you don’t know your current credit score, chances are good that you are not prepared to begin filling out FHA loan paperwork. Before you commit to applying for a new home loan, it’s strongly recommended that you pull your most recent credit report, check your FICO scores and see what your lender will see when he or she requests the same information. If you don’t know what the lender will see, find out before the bank does. What Does My Payment Record Look Like? Have you missed ANY payments in the 12 months | more...

March 31, 2015

FHA Clarifies Rules For FHA HECM Loans

By Joe Wallace

The FHA and HUD have clarified rules that govern how FHA Home Equity Conversion Mortgage Loans are handled with regard to “life expectancy set-asides” and calculation of property taxes as part of a borrower’s debt-to-income ratio. FHA Mortgagee Letter 2015-09, “establishes a monthly growth rate for Life Expectancy Set-Asides and clarifies a discrepancy between the HECM Financial Assessment and Property Charge Guide and the model HECM Financial Assessment Worksheet transmitted with Mortgagee Letter 2014-22.” What is a “life expectancy set-aside” and how does the new clarification affect it? According to the FHA, “The Life Expectancy Set-Aside (LESA) is used for the payment of property taxes, and hazard and flood insurance premiums, and will increase each month at a rate equal to one-twelfth of the sum of the mortgage interest rate | more...

September 5, 2014

Property Taxes and Reverse Mortgages: A Reader Question

By Joe Wallace

A reader got in touch with us recently with a lengthy question about reverse mortgages. We won’t reprint the entire message, but here are the relevant parts: “The Reverse Mortgage Company….(Lender name deleted) changed to (Lender name deleted) told us in Feb 2014 they would pay our property taxes for 2013 because we were struggling. As of today and 35 calls later they still have not paid them.Today for the first time I heard the words ‘redemption period’ She assured me we would be notified AGAIN as soon as they are paid and we can make arrangements to pay it back.” “We are close to the end of the year and id not paid by Dec. we are in trouble with our local tax bureau. I don’t understand what is | more...

July 25, 2014

FHA Loan Rules For Refinancing and Reverse Mortgages: A Reader Question

By Joe Wallace

A reader asks, “We were told to get a reverse mortgage, while applying for a reverse mortgage my husband was under the impress that we did not have to make a mortgage payment. He did not make 2 payments. We have never misses a payment including the 28 years we owned our first home. The person who recommend the reverse mortgage did not explain. explain the process to us, once the paper work was competed he told us that we had to pay 85 thousand dollars in order to get a reverse mortgage, which came as a shock to us and since we could not afford it we dropped out of the program.” “Now we need to defiance as our mortgage is $1250. a month and our condo fee is | more...

November 8, 2013

FHA HECM Loans

By Joe Wallace

FHA Reverse Mortgages, also known as Home Equity Conversion Mortgages or HECM loans, are designed for qualified borrowers aged 62 or older who own their home or have very few payments left on the home. There are three basic types of FHA HECM loans: Traditional (Equity in current property used to obtain a new HECM loan) Purchase (HECM loan proceeds used to purchase a principal residence) Refinance (Refinance of an existing HECM loan with a new HECM loan) The FHA loan rulebook, HUD 4155.1, says of HECM loans that the following properties can be used to secure the reverse mortgage/HECM: 1 Unit (Single Family Residence) 2-4 Unit with one unit occupied by the borrower HUD-approved Condominium Project Manufactured home built after June 15, 1976 Borrowers who are age-eligible to | more...

October 23, 2012

FHA Loans and Escrow Accounts: What You Should Know

By Joe Wallace

Many home loan applicants find themselves opening escrow accounts at the request of their lender for such things as property taxes and other expenses related to owning a home purchased with an FHA mortgage. While the FHA loan program does not require an escrow account, the lender may. The FHA official site reminds borrowers and lenders alike that it’s misleading for any lender to imply that FHA loan rules issued by the Federal Housing Administration require escrow; this is not true but the lender is free to do so. The FHA official site says of escrow, “Section 10 of the Real Estate Settlement Procedures Act (RESPA) limits the amount of money a lender may require the borrower to hold in an escrow account for payment of taxes, insurance, etc. RESPA | more...

June 29, 2012

Questions and Answers About Escrow Accounts and FHA Loans

By Joe Wallace

The Department of Housing and Urban Development official site at www.hud.gov offers a large amount of valuable resources for first time home buyers interested in purchasing a home with an FHA guaranteed mortgage loan. Among those resources are details of the Real Estate Settlement Procedures Act (RESPA) which governs a variety of aspects of the home loan process. One of those aspects is the escrow account–something many lenders may require as a part of doing business in a home loan transaction. What does RESPA say about escrow accounts? For starters, the FHA does not require an escrow account as a condition of loan approval. Escrow accounts may be required by the lender, but no lender should be telling you it’s because of FHA requirements or RESPA laws. HUD does regulate | more...

May 15, 2012

FHA/HUD Advice on Closing The Deal on Your New Home

By Joe Wallace

There are many things about closing the deal on a new home that first-time home buyers should understand before getting to the bargaining table. Do you know, for example, what information should appear on a Good Faith Estimate, or how to compare that estimate to your HUD-1 Settlement Statement? Some borrowers are surprised to learn that some cost adjustments may be necessary at closing time. According to the FHA official site, “At settlement it is usually necessary to make an adjustment between buyer and seller for property taxes and other expenses. The adjustments between buyer and seller are shown in Sections J and K of the HUD-1 Settlement Statement.” Property taxes are just one area where the borrower should come to the bargaining table knowing what to expect. In the | more...

December 6, 2011

FHA Loan Debt To Income Ratio Rules

By Joe Wallace

In recent blog posts we’ve been examining the FHA loan debt-to-income ratio rules. The FHA requires borrowers to have a combined monthly debt load and projected FHA home loan obligation that does not exceed 41% of the borrower’s income. As stated in previous blog posts, FHA guidelines require the lender to examine the borrower’s monthly debts and compare to his or her monthly income. The total amount of debt including credit card payments, auto loan payments, student loans, and other payments, is added together, then combined with the total amount due each month for the FHA home loan. That figure does not just include the mortgage payment itself–it also includes any home owner association dues, amounts which must be deposited in escrow for property taxes and insurance, etc. When the | more...

November 22, 2011

FHA Loans, Escrow Accounts, and the Real Estate Settlement Procedures Act

By Joe Wallace

If you’re new to the home buying process, chances are good you’re learning plenty of new things about banking, the loan process, and escrow accounts. An escrow account is often required by lenders as part of an FHA home loan in order to pay property taxes, home insurance and other required expenses. But what are the rules governing escrow and what should the borrower know? To begin, the Real Estate Settlement Procedures Act or RESPA states that escrow is NOT mandatory as a condition of applying for an FHA home loan. That said, the lender is free to require an escrow account–but the FHA does not insist upon one. When a lender does require money to be held in escrow, the financial institution is limited by RESPA–there’s a maximum calculation | more...