Articles Tagged With: Real Estate

May 10, 2016

FHA Loan Credit Score Requirements: Which Score Gets Used?

How does the lender decide which FICO score to use when processing a borrowers mortgage loan application? This is a common question about FHA mortgage loans, and its not surprising why there is confusion in this area. After all, many borrowers will have three FICO scores, reported from the three major credit reporting agencies. Which of the three will the lender use? FHA loan rules governing this are found in HUD 4000.1 starting on page 127. This section begins by describing what the FHA loan rulebook calls the Minimum Decision Credit Score. According to HUD 4000.1: The Minimum Decision Credit Score (MDCS) refers to the credit score reported on the Borrowers credit report when all reported scores are the same. That doesn’t help clear things up for the borrower confused | more...

May 10, 2016

FHA Loan Appraisal Requirements and State/Local Code

By Joe Wallace

Recently we received a question in the comments section about FHA requirements for homes served by wells. The reader want to know if a “shallow well” was permitted. FHA loan rules do address an aspect of this reader question, stating that for existing construction the well must deliver a specified amount of water: “Existing wells must deliver water flow of three to five gallons per minute”. For new construction, FHA loan requirements state, “Wells must deliver water flow of five gallons per minute over at least a four-hour period”. But one thing that is very important to keep in mind is that for well water and many other appraisal issues including electrical systems, septic, plumbing and many other features, FHA requirements are not the only ones that must be observed. | more...

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

May 5, 2016

HUD Launches Healthy Homes App

By Joe Wallace

If you have been looking for a new home to purchase with an FHA mortgage, or if you have recently purchased a home, you may be interested in the latest app from the Department of Housing and Urban Development. The Healthy Homes app was created to raise awareness of healthy homes issues including mold, asbestos, pest control, carbon monoxide, and more. According to a press release on the HUD official site, “…this Healthy Homes app offers a convenient tool for users to learn about common health and safety risks in the home. The app provides extensive content in clear, simple language so that users can quickly understand the potential hazards throughout a home. The app also helps residents who live in condominiums, single- family detached homes, townhouses, or in apartment | more...

May 3, 2016

HUD: $37 Million To Fight Housing Discrimination

By Joe Wallace

The Department of Housing and Urban Development has announced $37 million in funding to fight housing discrimination. According to a press release on the HUD official site, the most recent announcement is one of three notices designed to, “support a variety of important fair housing activities, including fair housing testing in the rental and sales market, public education efforts, capacity building, and education and outreach activities.” The work HUD’s fair housing partners do every day is critical to our efforts to ensure that every family in America has an equal shot at finding the home that is right for them, said HUD’s Assistant Secretary for Fair Housing and Equal Opportunity Gustavo Velasquez, who was quoted in the press release. These grants help to provide the critical financial resources they need | more...

May 3, 2016

FHA Loan Rules: Cash to Close

By Joe Wallace

One of the most common questions we are asked in the comments section involves the nature of a borrower’s required minimum investment-the down payment-for an FHA mortgage. Some potential borrowers want to know if they can finance the down payment, others want to know if other closing costs might be counted as part of the down payment. In both cases the answer is no. Closing costs are separate from the borrower’s required 3.5% minimum down payment according to HUD 4000.1. Furthermore, the down payment must be paid in cash at or before closing time and cannot be financed into the loan amount. The money needed for a borrower’s down payment and certain closing costs are regulated by FHA guidelines. For example, a borrower can’t come up with a down payment | more...

May 2, 2016

Budgeting and Planning For Your FHA Loan

By Joe Wallace

If you are planning to apply for an FHA loan soon and are still in the planning stages of that loan, there are some expenses you can anticipate and save up for. Some borrowers may be interested in financing some of the costs associated with a new loan, but paying them up front can help save money over time. Those who choose to pay these costs up front are often looking at their mortgage loan over the long term. Those who choose to finance certain expenses where permitted may be trying to save money up front. Whichever option you choose, it pays to be an informed borrower-even if you know in advance you want to finance certain expenses. FHA loans and refinance loans have different rules for what expenses can | more...

May 2, 2016

Mortgage Loan Interest Rate Trends: Improving

By Joe Wallace

Mortgage loan interest rates had started moving higher in the last ten business days–seven out of then had rates either creeping higher or holding steady after doing so. But in the last three business days, we’ve watched rates begin to move back downward, pushing 30-year fixed rate conventional mortgages back into a range of rates. Professional market watchers report that conventional rates have a higher degree of variation lately due to market volatility, but in general 30-year fixed rate conventional mortgages are at a best-execution range between 3.625% and 3.75%. FHA mortgage rates are still in a range between 3.25% and 3.5% best execution. Best execution rates aren’t available to all borrowers or from all lenders–your experience may vary depending on FICO scores, loan repayment history and other financial qualifications. | more...

April 29, 2016

FHA Loan Questions: Minimum Income?

By Joe Wallace

Recently we were asked if FHA home loans have either an income limit, or a minimum amount the borrower must earn per month/year in order to qualify. FHA loan rules in HUD 4000.1 do not specify a maximum income. FHA loans are designed for those who want to purchase a home and want an alternative to conventional mortgages. FHA home loans are not created for a specific income bracket. Let’s examine the rules for income in HUD 4000.1: “The Mortgagee must document the Borrowers income and employment history, verify the accuracy of the amounts of income being reported, and determine if the income can be considered as Effective Income…” “…The Mortgagee may only consider income if it is legally derived and, when required, properly reported as income on the Borrowers | more...

When Is An FHA Loan Better Than A Conventional Loan?

April 26, 2016

FHA Loans and Borrower Debt: Recent Credit Applications

By Joe Wallace

When applying for an FHA mortgage, like any home loan, a borrower’s debt-to-income ratio will be an important factor in loan approval. The lender needs to know that the borrower can afford both monthly financial obligations as they exist at application time, and those financial commitments plus the amount of the monthly mortgage payment. For that reason, the lender will examine a borrower’s existing debt and compare it with verifiable income to see what percentage of the applicant’s income is taken up by bill payments each month. But what about a borrower’s potential future debt? Lenders have access to the borrower’s credit reports, and that access is used to see what current FICO scores are plus the applicant’s credit history. One thing that shows up on your credit history? Credit | more...

April 25, 2016

FHA Loan Borrower Ownership and Occupancy Requirements

By Bruce Reichstein

FHA loan rules for all single-family home loans, reverse mortgages, and refinance loans are found in HUD 4000.1. Those rules include a variety of instructions for the lender on how to process and approve FHA home loans. But there are also some regulations the borrower must follow, too. For example, FHA single family mortgage loans are intended for owner-occupiers only. HUD 4000.1 states that the borrower must take possession of the property within a reasonable time after closing, usually 60 days or less. There are also rules for borrower ownership and the nature of the borrower’s obligations under the FHA mortgage loan program. HUD 4000.1, page 128 has the following instructions: “To be eligible, all occupying and non-occupying Borrowers and co-Borrowers must take title to the Property in their own | more...