Articles Tagged With: Real Estate

April 20, 2016

FHA Loan Questions: Identity of Interest Transactions

For some FHA home loans, a higher down payment may be required when there is an “identity of interest” transaction. FHA loan rules in HUD 4000.1 define this 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.”An identity of interest transaction requires a 15% down payment unless the borrower qualifies for an exception. With this in mind, let’s look at a recent reader question in our comments section. A reader asks, “My wife and I went under contract on a house that is owned by her stepfather. We just found out yesterday about the FHA identity of interest certification. It is his rental property. Is | more...

April 19, 2016

Mortgage Loan Interest Rate Trends: Holding At Recent Lows

By Joe Wallace

On Monday, mortgage rates closed out the trading day holding at recent lows. There are some important economic data releases coming and there’s a meeting of the European Central Bank scheduled for Thursday–all, some, or none of these may affect rates depending on investor reaction to data and announcements that follow these events. Also, rates can also be influenced by breaking news or unexpected events that cause investors to react in ways that influence mortgage loan interest rates. However, those rates are low at the moment and holding there, but factors like the ones mentioned above could put upward pressure on rates, making the “lock or float” choice more complicated, especially for those with closing dates in the next month or so. At the time of this writing, 30-year fixed | more...

April 15, 2016

FHA Loan Rules In HUD 4000.1: Escrow

By Joe Wallace

FHA loan rules in HUD 4000.1 have several things to say about escrow accounts. FHA loan rules don’t require escrow for every single home loan or refinance loan, but there are cases where escrow is a must and there are also lender standards which may require setting up an escrow account to pay certain expenses associated with the transaction. FHA loan transactions may require escrow for payments to builders in association with construction loans, rehab loans or reverse mortgages. The standards and circumstances vary from loan to loan, so if you aren’t sure whether an escrow account is needed for your FHA loan transaction, discuss your situation with the loan officer. In some cases escrow is used to pay property taxes, in others it may be used to disburse funds | more...

April 15, 2016

Mortgage Rate Trends: Slightly Higher

By Joe Wallace

On Wednesday and Thursday, mortgage loan interest rates have risen slightly. We’ve had a couple of scheduled economic data releases this week, but some market watchers this week gave bond market activity more attention. At the end of the day on Thursday, we see 30 year fixed rate conventional mortgages still being reported at 3.625% best execution in many cases, but our sources indicate that fewer lenders-the most aggressive ones-offered rates closer to 3.5%. So in effect, the slightly higher rates will come in the form of higher closing costs for some, but for others, the best execution rate may be the same as the day before depending on the lender. FHA mortgage loan rates are still holding at a best execution 3.25%. FHA rates tend to vary more among | more...

April 11, 2016

Mortgage Rate Trends: Near Best Levels All Year?

By Joe Wallace

With only one day last week with rates moving upward, we’ve seen mortgage loan interest rates hit territory better than we’ve seen for a good portion of 2016. Much of last week was either improvement, or holding steady following that improvement. On Friday rates didn’t move downward, but they definitely held steady. 30 year fixed rate conventional mortgage rates with some very competitive lenders were as low as 3.5% best execution, with many more offering a best execution 3.625%. FHA mortgage loan rates remained at 3.25% best execution, having moved out of a previous range with 3.5% at the top end (best execution). It’s not clear whether this rate will become a new comfort zone for FHA loans or if we’re seeing a short term trend only. As always, best | more...

April 7, 2016

FHA Loan Income Standards: Stable and Reliable Income From Part Time Sources

By Joe Wallace

A reader asked us a question about FHA loan standards for income verification recently; “I was told today that my part time job could not be used because its not on a continuous basis. Is that true? I have worked this job part time for the last 4 years and its through out the year.” “Its home health care so I watch patients here and there throughout the year. As mentioned I have been employed there since 2012. Why will FHA not approve that income because I have not worked there in the last 30 days but Im still an employee. I also have a full time job.” FHA loan rules are very clear about the nature of part-time income when it comes to verifying it for the FHA loan. | more...

March 31, 2016

FHA Loan Questions: Mixed Use Property

By Joe Wallace

We answer many questions about FHA home loans in the comments section. Here’s one of the most recent, on the subject of mixed-use properties, co-borrowing, and more: “My sister and I want to buy a house that is 1/2 apartment, 1/2 store. I already own a home and have an 820 credit score. She has a 620 score, and would be the owner occupant. I am married. Does my husbands income affect the debt to income ratio? If not, am I only calculated as responsible for 1/2 of our mortgage payment each month?” There are several issues that can affect the answers to these questions. To begin with, let’s examine what FHA loan rules in HUD 4000.1 say about transactions with non-occupying co-borrowers: “A Non-Occupying Borrower Transaction refers to a | more...

March 31, 2016

Mortgage Rate Trends: Recovering Lost Ground

By Joe Wallace

Mortgage rates have reclaimed some lost ground in the wake of a speech this week by Fed chair Janet Yellin. The Fed is still committed to “carefully” raising interest rates–a gradual increase as the U.S. economy continues to improve. The markets that affect mortgage rates has responded to this (among other factors) and we’re seeing mortgage rates starting to move lower accordingly. 30-year fixed rate mortgages were reported moving into a best execution range between 3.625% and 3.75%. FHA mortgage rates haven’t moved out from the comfort zone we’ve been discussing for some time so in spite of the conventional move we still see FHA mortgage rates at a best execution range between 3.25% and 3.5%. FHA rates vary more among lenders than their conventional equivalents so your experience may | more...

March 22, 2016

How Much Can I Borrow With An FHA Mortgage Loan?

By Joe Wallace

One of the most common questions about FHA loans is, “How much can I borrow?” The answer to that question is a lot easier to get by using an online mortgage calculator to factor in the length or term of the loan, interest rate (estimated), estimated property taxes and other details. Some of the information you need to calculate how much you can borrow depends on circumstances. The interest rate, for example, is determined in part by what rates are on offer currently based on market conditions and other factors but also by your credit history and FICO scores. The better your FICO scores are, the better the interest rates. The borrower and the lender negotiate interest rates on FHA mortgages, they are not set or regulated by the FHA | more...

March 21, 2016

Mortgage Rate Trends: Slightly Lower Friday

By Joe Wallace

Friday closed out the week slightly lower, which means that a majority of last week brought some form of mortgage loan rate improvement or at the very least no moves higher. All days but one last week were marked by some kind of small gain, taking back some of the losses from the week prior. At the time of this writing, 30-year fixed rate conventional mortgages are in a best execution range between 3.625% (likely the most competitive lenders are offering something at or near this) and 3.875%. Our sources note that the average best execution rate offering likely falls somewhere in the middle of this range. FHA mortgage loan interest rates remain in their best execution comfort zone in a range we’ve reported for some time now–between 3.25% and | more...