Articles Tagged With: Real Estate

December 12, 2016

Appraisal Issues: Wood Floors

FHA appraisal topics have been very popular recently in our comments section. One reader asks, “I’m going to view a home that has a plywood floor in the basement. not sure if that will be acceptable by FHA guidelines. Is there somewhere I can access a list of what is unacceptable?” FHA appraisal requirements for forward and “reverse” mortgages (HECM loans) are found in HUD 4000.1, starting on Page 465. This handbook can be downloaded from the FHA official site at www.fha.gov. A quick scan of HUD 4000.1 doesn’t reveal a specific requirement for the nature or construction of wood flooring in basement areas, but that leads us to a very important point where issues like these are concerned. FHA appraisal rules are NOT the only guidelines that must be | more...

December 12, 2016

FHA Loan Appraisal Issues: Water and Septic

By Joe Wallace

A reader asks, “Im selling a house with a septic tank. The home was renovated and an addition was added, and the septic tank was opened, inspected, drainedor whatever they do to septic tanks. Since there was an addition, we had to get an inspection. A year ago the county ran sewers in the subdivision and now theres a place to connect mine if I decide to do so. But the water bills my neighbors who connected to the sewer get now are close to triple what mine are! Would FHA really make a loan contingent upon” (hooking up to the local utility)? There is no simple answer to questions like these because FHA requirements aren’t the only ones that need to be met; state and local ordinances, building codes, | more...

November 10, 2016

FHA Good Neighbor Next Door Loans

By Joe Wallace

A reader asks, “Im active duty military stationed overseas with 2 years left on my tour, and I’m interested in buying a home in my state or record to return to. If I take leave and occupy the house multiple times throughout the year, and have family watch it. Am I able to qualify under the FHA Good Neighbor Next Door Program? Or is that unlikely? The FHA Good Neighbor Next Door program is described on the FHA official site: “The Good Neighbor Next Door (GNND) sales incentive permits an Owner- Occupant Borrower who is a full-time law enforcement officer, teacher, firefighter, or emergency medical technician who meets HUD requirements to purchase a specifically designated HUD REO Property located in a HUD- designated revitalization area with FHA-insured financing at a | more...

November 9, 2016

FHA Loan Options: What You Should Know

By Joe Wallace

Are you thinking about purchasing a home? Or refinancing your current home loan? FHA mortgage loans and refinance loans offer a variety of options. For new purchases, an FHA mortgage loan allows qualified borrowers to purchase typical suburban homes, but also condo units, town homes, and manufactured homes. Any property that has a permanent foundation or will be affixed to a permanent foundation at closing time may be eligible for an FHA mortgage. (All homes considered for purchase with an FHA loan are subject to an appraisal and must meet basic FHA standards.) Heading 2 For new purchase loans, borrowers can choose a fixed interest rate mortgage or an adjustable rate loan. Borrowers who choose adjustable rate mortgages will be offered an introductory rate, and overall your FICO scores and | more...

October 24, 2016

Appraisal Rules For FHA Mortgages, Reverse Mortgages

By Joe Wallace

FHA home loans require an appraisal, which is designed to determine the fair market value of the home, but also to insure the property meets FHA minimum standards. While the appraisal must not be considered an inspection (and passing the appraisal is not a stamp of FHA approval or a guarantee that a home is free of problems), the FHA appraiser is required to report problem conditions may be spotted during the process. What does this mean? HUD 4000.1 states, “The Appraiser must report known environmental and safety hazards and adverse conditions that may affect the health and safety of the occupants, the ability of the property to serve as collateral, and the structural soundness of the improvements.” This is found on page 491, which also adds the following description/definition | more...

October 11, 2016

FHA Appraisals: A Reader Question

By Joe Wallace

A reader asks, “If a person purchased a home with an FHA loan, and later found out that there were serious mold issues with the home that had been covered up with sheets of drywall and structural issues with a foundation which is collapsing and joists sagging due to not building to code.would there be any recourse for the owner of a home that now cant afford to do the necessary repairs to fix?” These are serious issues, and unfortunately there is no one set answer-much depends on the circumstances involved. There are several questions which can affect the answer including whether or not the borrower paid for a home inspection in addition to the FHA appraisal. The FHA official site warns borrowers in no uncertain terms that the FHA | more...

September 21, 2016

Interest Rate Trends: Higher Ahead Of Fed

By Joe Wallace

Mortgage loan interest rates moved a bit higher on Tuesday ahead of Wednesday’s scheduled Fed announcement, which can and has influenced mortgage rates (depending on investor reaction to the contents of such announcements). Most likely borrowers affected by today’s increase will notice the changes in the form of closing costs, and today’s move is essentially a trend we’ve been watching in the short term. 30-year fixed rate conventional mortgages are reported at the time of this writing at or near a best-execution 3.5%. FHA mortgage loan rates are holding, best execution, at 3.25%, having given up a previous range between 3.0% and 3.25% earlier. As always, the rates you see listed here are best execution rates, which means an ideal borrower is assumed (with outstanding FICO scores, credit history, and | more...

FHA Loans And Natural Disasters: What You Should Know

August 23, 2016

FHA Loan Questions: Identity Of Interest

By Joe Wallace

A reader asks, “I am intending on purchasing a home from my boyfriend’s father. He bought the home for 70k and he is willing to sell it to me for 75k. We are in no way related. Is our relationship an identity of interest?” The “identity of interest” issue arises when a family member wants to sell a property to another family member who is using an FHA mortgage to buy the home. An identity of interest transaction can also be between two people who are business associates. HUD 4000.1 defines an identity of interest transaction as follows: “An Identity-of-Interest Transaction is a sale between parties with an existing Business Relationship or between Family Members. Business Relationship refers to an association between individuals or companies entered into for commercial purposes.” | more...

August 3, 2016

Mortgage Loan Interest Rate Trends: Higher On Tuesday

By Joe Wallace

Mortgage loan rates pushed slightly higher on Tuesday, thanks in part to bond market activity. There are also scheduled economic data releases this week that have the power to move mortgage loan rates depending on investor reaction to the data in those reports. Market watchers aren’t optimistic that lower rates are coming in the short term, while pointing out that we are still in a range of low rates. 30-year fixed rate conventional mortgages are, at the time of this writing, in a best execution range between 3.375% and 3.5%. That’s up slightly from the a previous range that had 3.625% at the bottom end. FHA mortgage loan rates hold steady at a best execution 3.25%. FHA rates tend to vary more among participating lenders so your experience here may | more...

August 2, 2016

FHA Loan Questions About Seller Contributions

By Joe Wallace

A reader asks, “What extra expenses does a seller pay for a FHA offer compared to a conventional offer when selling their home?” Seller contributions and their limits are covered in HUD 4000.1. It’s impossible to speculate what the differences might be between an FHA mortgage and a conventional mortgage as loan terms may vary from lender to lender. However, FHA loan rules are clear on this subject in terms of what is permitted and what is not. Seller contributions are known as “interested party contributions” in HUD 4000.1. These must be negotiated between borrower and seller, but the agreed-upon contributions must meet FHA standards. FHA loan rules are quite clear-there is a cap on the value of seller concessions. Page 220 of HUD 4000.1 states: “Interested Parties may contribute | more...