Monthly Archives: July 2012
A reader asks, “I
A reader asks, “When applying for an FHA loan, how long must I live on the property?”
Assuming the reader wants to know how long he or she must own the home before it can be sold, borrowers with this question should know there FHA loan rules that do apply to occupancy and how long a seller has owned the property.
For example, HUD 4155.1 Chapter Four Section B contains the FHA Requirement for Establishing Owner Occupancy, which states:
“At least one borrower must occupy the property and sign the security instrument and the mortgage note in order for the property to be considered owner-occupied. FHA security instruments require a borrower to establish bona fide occupancy in a home as the borrower
What is FHA loan assumption? Loan assumption is where the owner of the home purchased with an FHA mortgage wishes to transfer the loan and ownership of the property to another person, without the new owner applying for a brand new FHA guaranteed mortgage or conventional loan.
According to the FHA official site, “All FHA-insured mortgages are assumable.
FHA guaranteed home loans differ from conventional loans in many ways. The required down payment for FHA home loans is often lower (a minimum of 3.5% down is required, where conventional mortgages may ask higher down payments).
FHA home loans feature no penalty for early payoff, may have lower interest rates and other costs, and FHA loans can be assumed–a borrower may transfer the loan to another qualified borrower rather than having the borrower apply for a new loan.
But FHA home loans are also different because of the primary purpose of an FHA guaranteed single-family home loan–these loans are intended for residences. They are not for investment properties, time shares, etc. FHA loan rules state;
A reader asks, “I refinanced my home with a lender March 2011. That same lender called me a couple of months ago and said they could refinance me again at a 1/2 % less than what I am paying now at no out of pocket costs.”
“They are charging me upfront mortgage insurance premiums of over $2,000.00. Do I have to pay the FHA UFMIP again, or are the trying to stick me with junk fees?”
FHA loan rules on this subject are found in Chapter Seven of HUD 4155.2, Refinancing Loans. According to the FHA;
“In most of the FHA mortgage insurance programs, FHA collects an
In recent weeks we’ve posted several announcements about presidential disaster areas which were declared in Florida, Colorado, New Jersey, and Minnesota. One important benefit for some disaster victims in such cases is the FHA 203(h) Loan For Disaster Victims.
This FHA loan program is described on the FHA official site; “Under the Section 203(h), Mortgage Insurance for Disaster Victims program, FHA provides mortgage insurance to assist victims of presidentially-declared disasters.
In our previous blog post about FHA appraisal portability and transfers, we discussed the fact that FHA appraisals which have not expired can be transferred from one lender to another if the borrower decides to change lenders prior to the FHA loan closing.
This transfer is not automatic–the borrower is required to request the transfer, according to the rules issued in FHA Mortgagee Letter 09-29. Those rules also address something known as appraisal shopping, where a lender orders more appraisals, “to assure the highest possible value for the property and/or the least amount of deficiencies and/or repairs are noted and required by the appraiser.”
Appraisal shopping is expressly forbidden by FHA loan rules, but there are circumstances where a second appraisal might be warranted. According to the FHA, those situations include the following “limited circumstances”:
1. The first appraisal contains material deficiencies as determined by the Direct Endorsement underwriter for the second lender.
2. The appraiser performing the first appraisal is on the second lender
Are FHA appraisals “portable”? One reader asks, “I applied for an FHA loan through a large company a few months ago. I have decided to switch mortgage companies as the customer service has been really awful and the process has been taking 2-3 months for a closing date.”
“Can I use the appraisal from the FHA loan process that I am currently going through with the new mortgage company? It seems as though it would be valid for 120 days but I didn
A recent HUD press release, HUDNo.12-117, announced disaster assistance for New Jersey storm victims, including those with FHA guaranteed mortgages.
On Thursday, July 19th, President Obama announced a disaster declaration for Atlantic, Cumberland and Salem Counties. According to the press release, “The President
FHA loan rules include a list of items–settlement requirements–needed to properly close the FHA mortgage loan.
HUD 4155.1, Mortgage Credit Analysis for Mortgage Insurance, lists these requirements. They begin with the “Lender Responsibility for Estimating Settlement Requirements”. According to HUD 4155.1 Chapter Five Section A,
“For each transaction, the lender must provide the initial Good Faith Estimate (GFE), all revised Good Faith Estimates and a final HUD-1 Settlement Statement, consistent with the Real Estate Settlement Procedures Act (RESPA), to determine the cash required to close the mortgage transaction.”
FHA loan rules say that in addition to the down payment required for FHA home loans (3.5% at a minimum), other borrower expenses are to be included in the amount due at settlement time. “Such additional expenses include, but are not limited to