fha loans: Divorce and FHA Loan Applications
- 11/13/16 10:21 PM
FICO scores, debt-to-income ratios, and credit history aren't the only things that can factor in when the lender is gathering data from your FHA mortgage loan application. Borrowers who are divorced may experience additional requests from the lender for paperwork or supporting documentation.
We get questions about issues like these quite frequently. Here's one recent example from the comments section:
"Legally divorced in SC for close to seven years. There was no alimony, no children, and bills were split. The underwriters for an FHA re-finance are demanding a copy of the Separate Maintenance and Property agreement filed at the time of separation, a … (1 comments)
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fha loans: Mold Standards: An FHA Loan Question
- 10/23/16 07:14 AM
A reader asks, "Does the EPA or the FHA have the responsibility for setting the TLVs for mold spores in the air? What if the mold count is higher outside than inside?"
The FHA does not set or regulate such health issues, deferring instead to federal, state, or local authority where applicable. According to the Environmental Protection Agency's official site, we learn the following about mold as it relates to exposure in buildings (in general):
"Is sampling for mold needed? In most cases, if visible mold growth is present, sampling is unnecessary. Since no EPA or other federal limits have been set for … (0 comments)
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fha loans: FHA Loan Rules For Overtime Income
- 08/18/16 11:07 PM
A reader asks, "Can I use my current overtime income if I’ve been working at this company 20 months but my previous company I also had overtime which I worked there for 1 year and my previous before that I worked for 4 years with overtime?"
FHA loan rules require the loan officer to verify income that will be used toward calculating the borrower's debt-to-income ratio. Only verifiable income can be used, which means the lender must determine that the income is stable, reliable, and likely to continue. Income from a variety of sources may be considered.
Some FHA loan applicants have seasonal … (1 comments)
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fha loans: FHA Loans And Personal Data
- 08/05/16 01:26 AM
A reader asks, "Must income verification documents include sensitive information, such as account numbers, full SS# and bank account number(s). Can verification be made with sensitive information being Blacked-Out or omitted, as to not expose ones self to possible criminality?"
FHA loan rules require the lender to verify personal information including Social Security Numbers, bank account numbers, credit reports, etc. So the lender will definitely be required to have that information at the bank's disposal to verify not only the identity of the borrower, but also the sources of down payment funds and other money as governed by HUD 4000.1.
HUD 4000.1, page … (0 comments)
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fha loans: FHA Mortgage Loan Terms: Understanding Equity
- 07/24/16 11:55 PM
Let's Talk About Home Equity from FHA.com video on Vimeo.
Equity is an important term to understand when you're applying for any kind of mortgage loan, but for some loans equity is a larger factor than others. For example, when you apply for a new purchase FHA loan to buy a home, you start out with 3.5% of the adjusted price of the home as your equity. That's the amount of your down payment, and the equity grows over time with the number of payments you make.
When you apply for a home equity loan, a home equity line of credit, or an … (3 comments)
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fha loans: FHA Loan Questions: Co-Borrowers
- 06/26/16 01:55 AM
A reader asks, "My husband is a co burrower on his mothers mortgage loan and he has been asking her to remove his name from it but she hasnt. The mortgage has affected his credit and has made it hard to get a home of our own. Can his name be removed from the mortgage or is this something we need a lawyer for?"
Before answering this question, let's examine how the FHA defines the role of a co-borrower. Page 128 of HUD 4000.1 states:
"To be eligible, all occupying and non-occupying Borrowers and co-Borrowers must take title to the Property in their … (2 comments)
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fha loans: FHA Loan Questions: The Good Neighbor Next Door Program
- 05/26/16 08:13 AM
A reader asked us a question recently in the comments section about the HUD Good Neighbor Next Door program. "I am a 13 year veteran Corrections Officer of the Maryland's DCSCS and I wanted to inquire as to whether or not I qualified for the Good Neighbor Next Door Program."
The HUD Good Neighbor Next Door program is mentioned on the FHA/HUD official site, which states, "Law enforcement officers, pre-Kindergarten through 12th grade teachers, firefighters and emergency medical technicians can contribute to community revitalization while becoming homeowners through HUD's Good Neighbor Next Door Sales Program. HUD offers a substantial incentive in the … (0 comments)
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fha loans: FHA Loans and the Importance of a Home Inspection
- 03/18/16 12:12 AM
The difference between an FHA appraisal and a home inspection is an issue that crops up frequently--especially in reader comments. Borrowers applying for an FHA mortgage to buy a home are required to have an FHA appraisal to insure that property meets minimum standards. But when a home passes the appraisal process or allows the loan to go through as long as required corrections are made, does that mean the property has been inspected and approved by the FHA?
Not according to the FHA official site, which says an appraisal is never a guarantee or endorsement of any kind. Borrowers should know … (0 comments)
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fha loans: FHA Refinance Loan Types
- 02/23/16 06:09 AM
Do you want to refinance your home loan into an FHA mortgage or refinance an existing FHA mortgage? There are many different types of refinancing options and when HUD 4000.1, the new single family FHA loan rulebook was published in 2015 the entire refinance loan program rules were included in the new volume. That means some policies were updated, some were changed or modified, and some were simply restated.
HUD 4000.1 has a comprehensive list of the different types of FHA refinancing options open to those with single-family mortgages. Let's examine them:
FHA Cash-Out Refinancing
A Cash-Out Refinance is described in HUD 4000.1 as, … (0 comments)
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fha loans: HUD 4000.1 On Appraisal Expiration Dates
- 12/14/15 11:39 AM
Ever since the FHA and HUD published the new FHA single-family mortgage loan rule book, HUD 4000.1, we've been examining important sections of the rules to see what current FHA mortgage loan policy is; FHA and HUD announced there would be no comparison document outlining the myriad of changes from the old guidelines to new and that it was the reader's responsibility to learn what current policy might be for any given FHA loan topic.
With that in mind we started reviewing HUD 4000.1 and discussing important issues. One such issue is the FHA's rules on appraisal expiration dates. FHA appraisals are … (1 comments)
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fha loans: FHA Home Loans For Existing Properties: Weatherization
- 12/07/15 08:45 PM
Did you know that in certain cases, FHA single-family home loan rules in HUD 4000.1 permit the borrower to add funds to weatherize an existing construction home being purchased with an FHA mortgage? According to HUD 4000.1:
"The weatherization product permits the Borrower to finance the cost of eligible energy-related weatherization improvements, in conjunction with a purchase or refinance."
This is separate from an FHA Energy Efficient Mortgage (EEM) though that can also be included in the loan for qualified borrowers. From HUD 4000.1:
"Weatherization improvements may be financed in conjunction with the following:
--Section 203(b) purchase transaction (or) no cash-out refinance transaction
--Section 203(h) … (0 comments)
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fha loans: HUD 4000.1 On Calculating Maximum Mortgage Amounts For Purchase Loans
- 12/06/15 09:42 AM
HUD 4000.1 was published earlier in 2015, and contains new, updated, and restated FHA loan policy on single-family mortgages, refinance loans, HECM loans and more.
One important section of the new FHA home loan rules for single family mortgages is the part of HUD 4000.1 that discusses maximum mortgage loan amounts. Do you know what the rules are for calculating the maximum loan amount on a new purchase FHA loan?
According to HUD 4000.1, "The maximum mortgage amount that FHA will insure on a specific purchase is calculated by multiplying the appropriate LTV percentage by the Adjusted Value. In order for FHA to … (0 comments)
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fha loans: FHA Loan FICO Score Requirements: A Reader Question
- 12/04/15 12:54 AM
A reader got in touch with a question in the comments section about FHA loan FICO score requirements, asking, "I have a client that was denied by my lender but has an approval by another. My situation is this.parents are putting $200k down for the purchase. The boys will be qualifying for the $150k balance. Mid FICOS are 600 and 602 and one son has two lates within the last 6 months. My lender said that with a score below 640, they fall into a different category that prohibits any lates in the past 12 months. Can you please clarify?"
Lender standards … (0 comments)
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fha loans: The FHA Appraisal Process: Selecting An Appraiser, Appraisal Integrity
- 11/08/15 09:45 PM
HUD 4000.1, the new FHA single family home loan rulebook, has specific instructions to participating FHA lenders about the appraisal process. An appraisal is required as we learn from this line in Part II Section A of the rulebook:
"The Mortgagee must order a new appraisal for each Mortgage or refinance case number assignment and may not reuse an appraisal that was performed under another case number, even if the prior appraisal is not yet more than 120 Days old."
The mortgagee, or participating lender, is required to insure the integrity of the appraisal process as follows:
"Appraisers must comply with the Uniform … (1 comments)
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fha loans: FHA Loan FICO and Credit Minimums Versus Lender Standards
- 09/17/15 10:55 PM
I get many questions about the difference between FHA loan minimum FICO score and credit requirements and the lender requirements for same. Here's one of the latest examples:
"Seems like there is a lot of contradiction between what is on the FHA site and what the FHA Reps. are answering the consumers the questions. Why have FHA guidelines if the lenders dont have to follow them and can overrule them with their own? I have a credit score of 580 and a one time 30 day late mortgage payment in the past 12 months..."
There were other details in the reader question, but … (0 comments)
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fha loans: FHA Loan Appraisal Rules: Peeling Paint
- 08/29/15 02:34 AM
FHA appraisals can be tricky to understand, depending on the outcome. For example, we get asked several times a year why an FHA appraiser required corrections on cracked or peeling paint on surfaces in a given home.
The question is usually associated with the seeming cosmetic nature of these corrections. "Why," the readers will ask, "is this a must-fix when it's just some paint peeling off a windowsill or door frame?"
The answer in this particular case has a lot to do with lead abatement. Depending on the age of the home, lead paint may or may not be present. The FHA appraisal … (2 comments)
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fha loans: FHA Loans And Pre-Payment
- 07/31/15 01:29 AM
One of the important selling points of an FHA mortgage loan is the basic differences FHA mortgages have from conventional loans; the lower down payment, more forgiving credit requirements, and a rule that a borrower is able to freely dispose of the property in any way he or she sees fit once the deal is closed and the borrower has taken up residence in the home.
But there's another important difference between some conventional mortgages and FHA loans. Did you know that under the FHA loan program you cannot be penalized or charged for early payoff of the loan?
HUD 4155.2 Chapter Three … (3 comments)
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fha loans: FHA Home Loan Closing Policies
- 07/11/15 01:30 AM
Did you know that loan rules found in HUD 4155.2 cover specific aspects of the FHA loan closing procedure including taxes, closing costs, and title issues?
Chapter Six of HUD 4155.2 explains these policies. For example, in Chapter Six we learn that the lender is permitted to calculate--and collect--property tax payments under the right circumstances:
"...The lender may project real estate tax payments, and collect those funds as a portion of the monthly escrow account payment without violating the Real Estate Settlement Procedures Act (RESPA). RESPA requires that a borrower receive an initial escrow account statement at settlement or within 45 days of … (1 comments)
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fha loans: FHA Home Loans: How Difficult Is It To Get To Closing Time?
- 07/01/15 03:14 AM
Every home loan is different. When you apply for an FHA mortgage, you may experience a variety of circumstances along the way that can affect how simple or difficult it is to get to your closing date.
Borrowers who prepare ahead of time, who get pre-purchase counseling, and learn from the mistakes of their fellow house-hunters can make the entire process simpler and easier to deal with.
That's one reason why the FHA has a list of resources on its official site (www.fha.gov) aimed at advising new borrowers, but the FHA and HUD are not the only government agencies that offer such assistance.
The … (1 comments)
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fha loans: What You Should Know About FHA Loan Interest Rates
- 06/12/15 11:36 PM
We get many reader questions about interest rates on FHA home loans, and it's clear from these questions that a misconception still exists--some people believe the FHA sets or regulates the interest rates on FHA single family home loans. This is not true, but in spite of that we get variations on a common type of question that goes something like this: "Should I expect an FHA loan interest rate above XYZ? What kind of interest rate should I be getting?"
The truth is that FHA loan interest rates, while lower than the conventional equivalents, is still subject to negotiation between the … (5 comments)
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