Articles Tagged With: Mortgage Underwriting

April 12, 2012

FHA Loan Credit Score Requirements

The FHA recently published “The Facts on FHA” on the official blog of the Department of Housing and Urban Development. One of the highlights of that post included a list of actions FHA and HUD have taken since 2009–more steps “to eliminate unnecessary credit risk and assure strong premium revenue flows than any Administration in FHA history” according to acting Federal Housing Administration Commissioner and Assistant Secretary for Housing, Carol Galante. One of the changes made by the FHA in recent times is an update to the required combination of FICO score requirements and down payments. According to Galante, “New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA’s 3.5% down payment program. New borrowers with less than a 580 FICO score | more...

April 11, 2012

FHA Loan Questions: Mortgage Insurance Payments

By Joe Wallace

A reader asks, “I am refinancing my home with FHA. I am financing $54,540.00 and the appraisal (by FHA) is $180,000.00. Since I have almost $125,000.00 in equity why are they making me purchase FHA mortgage insurance at $50.00 a month? How long will I have to pay this on a 30 year loan at 4.25%?” Mortgage insurance, also known as MIP, is required by the FHA because it protects the government and the lender against a loss should the borrower default on his or her FHA loan. FHA requirements include mortgage insurance for borrowers making a down payment of less than 20 percent. Mortgage insurance is also required on refinance loans and is included in various rules governing FHA refinancing loans such as the following: “The lender must determine | more...

April 10, 2012

FHA Loan Reader Question: Seller Contributions

By Joe Wallace

A reader asks, “My question: if the purchase price of a home I want to buy is 290,000 the maximum sellers concession can only be a maximum of 6% of the agreed price? Can it be more than 6% if the home values at a greater than 290k ?”

April 3, 2012

FHA Mortgage Insurance Premiums

By Joe Wallace

Yesterday, we answered a reader question about FHA loan Mortgage Insurance Premiums. We were asked, “I thought that it was announced recently that FHA insurance premiums were being decreased, not increased?

March 28, 2012

Getting Started With An FHA Home Loan

By Joe Wallace

Potential home buyers at the very start of their FHA home loan journey should take advantage of three free online resources that can help prepare the borrower. The first of these resources is the online mortgage calculator. These are offered by private agencies such as FHA.com, and by official government websites such as Ginnie Mae. The online mortgage calculator can help you plan and budget for an FHA home loan by showing you whether your current income is enough to qualify based on your monthly debts and other factors. Another important resource is the Department of Housing and Urban Development’s online Homebuyer’s Kit, which offers everything from a cost analysis of buying versus renting to learning about home buyer’s assistance programs in your state. This kit is fairly comprehensive and | more...

March 23, 2012

Streamline Your FHA Mortgage

By Joe Wallace

According to the FHA official site, streamline refinancing for FHA home loans has been offered since the 1980s. While “streamline refinancing” refers to the amount of paperwork involved with processing the new home loan, it is not meant to imply there are no costs involved with the refinancing loan. FHA streamline refinancing loans for borrowers with existing FHA mortgages must result in either a lower interest rate, a lower monthly payment, or both. Exceptions are made when the borrower is refinancing into an FHA streamline mortgage from an Adjustable Rate Mortgage, also known as an ARM loan. Unlike FHA cash-out refinancing, no money is permitted to go to the borrower as part of the streamline loan. That means no “debt consolidation” or other purposes are permitted with FHA streamline loans–these | more...

March 15, 2012

FHA Loan Reader Question: Collection Actions and Payment Agreements

By Joe Wallace

A reader asks; “I have a student loan that was passed over to a collection agency. I came to a payment agreement with my case manager to pay $50 monthly payments. The original payment amount before collections was $200 a month. I have made consistent payments for 2 years now.” “I am set to close on a house in a few weeks. My mortgage lender is requiring a letter from my collection agency verifying our payment arrangement before I can close. I have called and talked to my case manager at the agency three different times and he is refusing to send any kind of validation letter to acknowledge the payment agreement. The payments have been set up on automatic draft out of my checking account which the agency set | more...

March 7, 2012

FHA Loan Rules: Down Payments

By Joe Wallace

There are several government-backed home loan programs available for qualified borrowers. Some programs are for a specific set of people, such as the VA insured loan program for eligible veterans, while others like the FHA insured mortgage loan program are intended for any qualified borrower. There’s sometimes a bit of confusion between VA loan rules and FHA home loan regulations because the two programs are insured by the government, albeit by different agencies. VA home loans, for example, feature a no-money-down option that is sometimes mistaken for a feature of the FHA home loan program. Occasionally we get a reader question asking if the FHA loan program offers a similar no down payment FHA mortgage or if first-time FHA loan applicants are required to make a down payment. All FHA | more...

February 20, 2012

FHA Loan Reader Question: Self-Employed Borrowers

By Joe Wallace

A reader asks, “Is it possible to get an FHA loan if the ‘gap’ in employment was due to starting your own business? I have 1099?s that show income, as well as pay stubs as a contractor with a contract in place. The company paying me wants to hire me full time as a w-2 employee.” FHA home loans require the borrower to verify employment, but the lender does not have to deny a loan simply based on alternative, non-traditional, or self-employment. However, the rules for these types of employment are a bit more stringent so that the loan officer may properly verify income. When you fill out an FHA loan application, you’re required to list your employment prior to the period of self-employment, plus list out specific details of | more...

February 16, 2012

Historic Settlement Between Federal Government and Five Major Banks

By Joe Wallace

The Department of Housing and Urban Development recently announced a $25 billion settlement between the government and the five largest banks in the U.S. United States Attorney General Eric Holder, Department of Housing and Urban Development (HUD) Secretary Shaun Donovan, Iowa Attorney General Tom Miller and Colorado Attorney General John W. Suthers announced the “landmark $25 billion agreement with the nation’s five largest mortgage servicers to address mortgage loan servicing and foreclosure abuses.” According to the press release, this is the largest federal-state civil settlement ever obtained and is the result of “extensive investigations by federal agencies, including the Department of Justice, HUD and the HUD Office of the Inspector General (HUD-OIG), and state attorneys general and state banking regulators across the country.” The settlement includes Bank of America Corporation, | more...