Articles Tagged With: Second Mortgage

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

October 7, 2015

FHA Loans, HUD 4000.1, and Second Appraisals: When One Can Be Ordered

In our last blog post we discussed FHA appraisals, and the fact that FHA loan rules do not permit the request of a second appraisal simply to raise the value of the property or to eliminate required corrections listed on the original appraisal report. So when can the lender order a second appraisal? What circumstances justify this action? The answer can be found in HUD 4000.1, Section II, Part A. According to this part of the FHA loan rules under “Second Appraisals By Original Mortgagee”: “A second appraisal may only be ordered if the Direct Endorsement (DE) underwriter (underwriter) determines the first appraisal is materially deficient and the Appraiser is unable or uncooperative in resolving the deficiency. The Mortgagee must fully document the deficiency and status of the appraisal in | more...

June 26, 2014

FHA Loans For Second Homes? A Reader Question

By Joe Wallace

A reader asks, “I would like to know how hard it is to get a loan on buying a second home. Our credit scores are 649 and 685. Before anyone runs our credit again, my husband makes 2000 a month plus we get SS of 2500 a month.” The answers to this reader’s questions depend greatly on a number of factors not mentioned in the question. First there’s the question of the first home–is there an existing FHA mortgage? FHA loans for new purchase transactions require occupancy and borrowers are not permitted to apply for FHA loans for homes they don’t plan to occupy as their full time residence. FHA loans for single-family homes are intended for borrowers to purchase for their own occupancy and an FHA single family mortgage | more...

February 19, 2014

FHA Loan Reader Questions: Divorce, First Mortgages, and Second Mortgages

By Joe Wallace

A reader asks, “Currently, my husband and I have a FHA loan on our primary residence. We are no longer living together, but still married. I have lived in the home for the last 5 years and paid the first mortgage which is current, never late. My husband inquired a second mortgage on the property in 2006 but is not current on the payments of the second mortgage.” “The second mortgage is in his name only. He filed bankruptcy in 2009 which has been discharged. He did not reaffirm debt of the first mortgage, but he reaffirmed the second mortgage. Can his name be removed from the FHA loan, especially since he is no longer obligated to pay the first mortgage by not reaffirming the debt during his Chapter 7 | more...

December 8, 2011

FHA Loan Foreclosure Avoidance Options

By Joe Wallace

According to HUD.gov, there are a variety of options for borrowers to consider when trying to avoid FHA loan default or foreclosure. The options are not guaranteed for all borrowers–you may be required to qualify for each program depending on your circumstances, whether or not you are current on the FHA home loan and other factors. It’s very important to consider these options before you have missed any payments or are in ongoing financial trouble on the loan–doing so keeps you eligible for the most advantageous terms and options. FHA Borrowers who want to modify or refinance their loans for lower payments should consider one or more of the following options: Home Affordable Modification Program: This program, also known as HAMP, lowers the borrower’s monthly mortgage payment to 31 percent | more...

November 3, 2011

FHA Loans and Foreclosure Avoidance: Some Basics

By Joe Wallace

There have been several reader questions lately about the foreclosure process on FHA home loans. What options do FHA borrowers have when facing the risk of default and/or foreclosure on their FHA mortgages? A quick look at the FHA official site’s page on the subject of foreclosure avoidance at http://portal.hud.gov/hudportal/HUD?src=/topics/avoiding_foreclosure reveals several options. One program known as HAMP is the Home Affordable Modification Program, which “lowers your monthly mortgage payment to 31 percent of your verified monthly gross (pre-tax) income to make your payments more affordable.” According to the FHA, a typical FHA loan modification under HAMP “results in a 40 percent drop in a monthly mortgage payment. Eighteen percent of HAMP homeowners reduce their payments by $1,000 or more.” Another program borrowers may consider is the Principal Reduction Alternative, | more...

August 16, 2011

FHA Mortgage Insurance Premiums: Are They Tax Deductible?

By Joe Wallace

Successful home ownership requires borrowers to become more financially savvy in several ways; one of those ways is finding any possible way to save money as a home owner. FHA borrowers often invest in energy-efficient upgrades, modern insulation, even solar heaters. Refinancing an FHA home loan to lower the interest rate is another way to save, and for some homeowners tax legislation could help improve the bottom line even more. Some borrowers are now eligible to deduct some of their FHA mortgage insurance premiums on federal income tax returns. According to the FHA official site, FHA loan applicants who closed their transactions between 2007 and 2010 may be eligible based certain conditions spelled out in IRS rules. The FHA official site states, “Legislation was recently passed to make FHA mortgage | more...

May 6, 2011

Refinancing to an FHA Mortgage From a Conventional Loan for Underwater Borrowers

By Joe Wallace

In a troubled housing market, many borrowers discover the property they’ve invested in has lost value, and the borrower may owe more on the home than they can reasonably expect to sell the property for. What does a borrower do in a situation where a potential loss on the home could occur through no fault of their own? For a limited time the FHA offers help to those in “negative equity positions” with an FHA refinancing loan option that moves the borrower from a conventional mortgage to an FHA-insured loan. The program was created specifically for homeowners with conventional loans owing more than the current value of the property. These “underwater” borrowers must meet specific FHA requirements, and lender participation in the program is voluntary, but qualified underwater home owners | more...

April 6, 2011

FHA Loans: Can A Borrower Have More Than One? (Part Two)

By Joe Wallace

In our last blog post we discussed FHA loans and whether a borrower can apply for a second one while maintaining the first. This situation is different than refinancing or getting a second mortgage–the situation in question involves the borrower’s ability under FHA regulations to buy another property with a new FHA insured loan. The FHA only allows this under specific circumstances. For example, a borrower who relocates to a new area outside a “reasonable commuting distance” may be allowed to apply for a second FHA loan to buy a new property in the new location. In such cases the borrower is allowed to apply for a new loan but isn’t forced to sell the old property. This makes the old home a possible rental unit under the right circumstances–the | more...

February 14, 2011

FHA HECM Loans: When Do They Come Due?

By Bruce Reichstein

An FHA Home Equity Conversion Mortgage loan (or HECM for short) is available for qualified borrowers age 62 and older who have equity built up in their home and want to borrow against it. HECM loans are described by the FHA as being a great deal different than the traditional second mortgage for several reasons; "With a traditional second mortgage, or a home equity line of credit, you must have sufficient income versus debt ratio to qualify for the loan, and you are required to make monthly mortgage payments...."

December 28, 2010

FHA Reverse Mortgage Options

By Joe Wallace

FHA HECM loans or reverse mortgages are designed for borrowers age 62 and older. These mortgages are designed to let qualified applicants take out a loan against the equity in the home--loans that can be used for living expenses, home improvements, even the purchase of a primary residence if the borrower is willing to pay (in cash) the difference between the FHA HECM loan amount and the sales price and closing costs. According to the FHA, HECM loans differ from typical home loans or second mortgages because, "no repayment is required until the borrower(s) no longer use the home as their principal residence or fail to meet the obligations of the mortgage."