Articles Published in: June 2011

June 21, 2011

Facts About FHA Loan Fees

When you apply for an FHA home loan, make the commitment to buy and close the deal, there are a variety of services which must be paid for as part of the home buying process. Some fees are paid by the borrower, some by the lender, and some by the seller. Do you know what fees you’re responsible for as a borrower taking out an FHA mortgage? FHA loan fees the borrower must pay include a loan origination fee, which includes payment for the cost of doing business with your chosen lender. The buyer is also responsible for any title search and examination fees, plus legal fees where applicable. For some home sales with an FHA loan, the sellers may agree to pay the legal fees–part of an incentive to | more...

June 20, 2011

Can I Use Rental Income on My FHA Loan Application?

By Joe Wallace

An FHA loan applicant who owns a property he or she is currently renting would naturally want to include that income on the loan application. As with all other sources of income, the borrower must not only list the amount of that income, but also be able to show to the lender that the money is stable. Since an FHA lender is charged with verifying all sources of income, the borrower must provide proof that rent money coming in is likely to continue. What does the FHA require as proof of dependable income when it comes to rent payments? According to the FHA official site, “Examples of stability may include a current lease, an agreement to lease, or a rental history over the previous 24 months that is free of | more...

June 20, 2011

FHA Loans and Rehab Grants

By Joe Wallace

One frequently asked question about FHA loans is about FHA grants for home repair. Does the FHA provide grant money for home buyers or FHA borrowers to repair or fix up a home? The short answer is no. While you may read FHA press releases such as a recent item about the FHA awarding $27 million in “sweat equity grants”, (HUD Press Release No. 11-122), it’s important to make the distinction between a grant to

June 17, 2011

The FHA Energy Efficient Mortgage

By Joe Wallace

Making improvements in a new home to include energy efficient upgrades can save a borrower a lot of money in utility bills. Modern windows, solar powered water heaters, improved air conditioning systems and other upgrades are all within a borrower’s reach when purchasing a home with an FHA insured mortgage thanks to a feature called the Energy Efficient Mortgage. FHA Energy Efficient mortgages are for qualified borrowers buying a single family home. Under the terms of an FHA Energy Efficient Mortgage or EEM for short, energy efficient improvements must be selected by the borrower and the amount of energy savings the improvements would give every month. There must be a tangible benefit to the borrower in terms of energy efficiency and/or savings for each improvement. These savings must be calculated | more...

June 16, 2011

Can I Use a Power of Attorney For an FHA Home Loan?

By Joe Wallace

There are many situations where borrowers, co-borrowers or family members might need to use a power of attorney to continue financial arrangements, including an FHA home loan. Some borrowers or their family members, acting on behalf of someone who can’t represent themselves, may furnish a power of attorney (POA) to continue a financial arrangement or give final approval. One popular use for a power of attorney is when a military member is suddenly deployed or sent on a military assignment on short notice. The purchase of a new home shouldn’t be cancelled on account of an important job requirement–if the person is willing to let someone else represent him or her using a power of attorney. When it comes to FHA home loans, the rules state, “A power of attorney | more...

June 15, 2011

What Is the FHA Streamline 203(k) Program?

By Joe Wallace

A type of loan called the FHA Streamline 203(k) allows a borrower to finance up to an additional $35 thousand of repairs and upgrades to a FHA mortgage. This loan is designed to “to purchase and improve or upgrade the home before move-in” but can also be used to refinance an existing mortgage and add repairs or improvements up to the same $35,000 amount. According to the FHA official site, “Unlike the standard 203(k) program, any FHA approved lender may originate a Streamlined 203k mortgage.” The availability of additional funds to repair or improve a home can be a powerful incentive to close the deal on a home that still needs work to make it truly attractive to the buyer, but it’s important to know exactly what the Streamline 203(k) | more...

June 15, 2011

Types of Reverse Mortgages

By Joe Wallace

Federal law, including FHA regulations and requirements, govern how loans and many real estate services may be advertised or marketed to the consumer. But in spite of these laws, some companies choose to include misleading or intentionally vague wording about some loan products that may seem to imply that company is endorsed by the government or that the services offered are somehow in connection with the FHA or HUD. For example, not all reverse mortgages are FHA Home Equity Conversion Mortgages or HECM loans. But it would be very easy for a company to describe something very similar to an FHA HECM or reverse mortgage and allow the public to draw their own conclusions–however true or false–about whether that program is FHA approved. There are three basic types of reverse | more...

June 14, 2011

FHA Announces the End of the HOPE For Homeowners Program

By Joe Wallace

The Department of Housing and Urban Development has sent guidance to lenders and FHA mortgagees about the phase-out of the Hope For Homeowners program, which is due to effectively end on September 30, 2011. During the housing market crisis of 2008, the federal government created several programs in an attempt to help stabilize the American housing market. As part of that effort, the Emergency Economic Stabilization Act of 2008 was signed into law, which included authorization to create programs like HOPE For Homeowners. HOPE was intended to prevent qualified applicants from going into default and foreclosure by offering affordable refinancing programs featuring fixed-rate mortgages. FHA Mortgagee Letter 11-20 announced the phase-out of HOPE For Homeowners, including a July 29, 2011 deadline for new case numbers under the HOPE refinancing program. | more...

June 14, 2011

FHA Loans: Seller Contributions Vs. Inducements To Purchase

By Joe Wallace

In a tough housing market, house sellers often must include incentives to make their property more attractive to a borrower. In other words, the seller isn’t just putting the home up for sale, there are a few bonuses thrown into the deal such as helping with the cost of pre-paid expenses, paying discount points or other things. Some sellers will throw in some appliances as an incentive, others might offer to furnish a new large screen television, etc. When it comes to FHA loans, there are limits on how much and how far such incentives can go. The seller is not forbidden to offer any incentives, but there’s a difference between a contribution and what the FHA considers “inducements to purchase”. An inducement to purchase, while not illegal, does result | more...

June 13, 2011

FHA Loans and Your Credit Report

By Joe Wallace

Anyone applying for a new line of credit agrees to submit to a credit check, whether for a new car purchase, a credit card account or an FHA home loan. When it comes to FHA loans, the credit history is identified in FHA literature on home loans as “the most useful guide in determining a borrower’s attitude toward credit obligations and predicting a borrower’s future actions.” Simply put, an FHA loan applicant with a record of on-time payments looks like a good credit risk to the lender. But what about those who have had trouble in the past paying on time? When the lender examines your credit history, it’s not a simple case of saying no because the facts and figures show a history of late payments. According to the | more...