Articles and news about FHA loans and HUD requirements. FHA loans are great for first-time homebuyers.

Monthly Archives: August 2015

FHA Loan Rules: Divorce and Separations

2015-13We frequently handle reader questions in the comments section regarding FHA loan policies that affect borrowers going through a legal separation or divorce. In some cases, the questions have a lot to do with why a lender may require the spouse’s credit information or other details even though the couple is legally separated.

One recent question addressed just that-the FHA loan applicant was being asked by the lender about spouse credit issues even though there was a legal judgment or ruling stating the couple was legally separated and not involved in joint credit or shared debt according to the terms of the legal agreement.

Why would the lender, the reader wondered, still require the spouse’s financial or credit information?

Unfortunately, there is no one specific answer to give. Some states have community property laws which may require a certain procedure so long as the couple is still legally married. In other cases there may be lender standards at work that, depending on circumstances, would require certain information as long as the couple’s official status is anything other than officially, legally divorced.

And sometimes, there may be an erroneous read of either FHA loan rules or even lender standards that might be clouding the issue–human error is sometimes a factor.

But the bottom line is that when in doubt, legal counsel may be required in such cases–any situation that involves state law is outside the jurisdiction of the FHA. Any situation that involves a basic mis-application of FHA loan rules is a different story, but only the FHA itself can make the determination that its rules have not been applied properly.

Speaking to the lender and to legal counsel is the best way to begin addressing these issues. If you have doubts that FHA loan rules have been followed properly, contact the FHA directly at their toll-free number: 1-800 CALL FHA.

Do you work in residential real estate? You should know about the free tool offered by FHA.com. It’s designed especially for real estate websites–a widget that displays FHA loan limits for the counties serviced by those websites.

It is easy to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today: http://www.fha.com/fha_loan_limits_widget

FHA Loan Questions: Title Problems

2015-14What follows should not be construed as legal advice. As a general rule, it’s a smart philosophy to seek legal advice for a lawyer and be wary of legal guidance from a non-lawyer. The best legal advice any non-lawyer can dispense is, “talk to a lawyer”.

A reader got in touch recently with a question about FHA refinance loans. He asked about a situation where the bank’s title search uncovered a lien against the property from a third party. “…Title search showed that the property was also deeded to another person that had a lien on the property.”

“We went to two trusted lawyers that advised us to file Bankruptcy because the other property owner was in trouble with the law and that the Title insurance we paid for was for the lender not us. Could you give us any advice in this matter?”

Readers should know that “ask a lawyer” is the first thing that springs to mind, but there’s another angle that is important to call attention to in cases like these–not all lawyers have expertise or understanding of real estate law.

A more helpful piece of advice in this situation would be to instruct the home owner to seek legal counsel from a local or regional lawyer who has specific legal experience in real estate law and understands how that laws of that state might affect the outcome of any case brought as a result of contacting legal counsel.

A simple understanding of the law isn’t enough to navigate the complexities of certain legal issues associated with titles, liens, property ownership, and disputes about same. Subject matter experts in real estate law are helpful, legal experts with real estate law knowledge even more so.

A borrower may wish to contact the FHA directly at 1-800 CALL FHA to discuss the situation in general to inquire whether it’s possible that FHA guidelines were not fully met with the original loan. The FHA cannot dispense legal advice to any callers, but it may be able to help determine whether the original loan was in compliance and what steps might be taken if not.

Do you work in residential real estate? You should know about the free tool offered by FHA.com. It’s designed especially for real estate websites–a widget that displays FHA loan limits for the counties serviced by those websites.

It is easy to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today: http://www.fha.com/fha_loan_limits_widget

FHA Mortgage Loan Interest Rate Trends

093After three solid days of upward movement on interest rates for mortgage loans in general, Friday’s market activity was such that there was no general shift in rates either way–much of the differences seen in Friday’s interest rates would depend on the lender. According to our sources, some were slightly higher, others slightly lower.

Some will notice higher or lower actual rates; others will notice the changes in the form of altered closing costs, depending on the lender.

30-year fixed-rate conventional mortgage loans remained in a best-execution range of rates between 3.875% ad 4.0% depending on the lender. FHA mortgage rates continued in their long-held best execution comfort zone of 3.75%.

FHA rates tend to vary more among lenders than 30-year fixed rate conventional equivalents, so do some comparison shopping to make the most informed choice.

As always, best execution rates are offered to borrowers with the most competitive FICO scores and other financial qualifications. Your experience may vary depending on the lender, your FICO scores, etc.

Many industry professionals are advising borrowers within 30 days of closing to lock (at least as of Friday). Others don’t even bother with closing dates–if you’re happy with your current rate, lock. That’s the going advice from our sources. Naturally this is a decision only the borrower can make and you should always ask some advice of your lender before making a final decision. Some are looking to Monday in hopes of seeing a recovery, but only time will tell if those hopes are well-founded or not.

Do you work in residential real estate? You should know about the free tool offered by FHA.com. It’s designed especially for real estate websites–a widget that displays FHA loan limits for the counties serviced by those websites.

It is easy to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today: http://www.fha.com/fha_loan_limits_widget

 

FHA Announces New Guidelines For Energy Efficient Upgrades

001The FHA has issued a press release announcing new guidelines for FHA borrowers who want to add energy-efficient upgrades to their homes.

According to HUDNo.15-112, the announcement comes as part of the White House National Clean Energy Summit. The Obama Administration and FHA have new guidelines, “supporting borrowers seeking to make energy efficient improvements to their homes. In todays announcement, FHA expressed the intent to allow borrowers to use Single Family FHA financing for properties with existing Property Assessed Clean Energy (PACE) loans that meet certain conditions” according to the press release.

These new tools will help homeowners make smart choices for their pocketbooks and for the environment, said HUD Secretary Julin Castro, quoted in the press release. Castro adds, HUD and the Obama Administration are proud to invest in American families and in the future of our planet.

As early as 2009, several states passed laws, “allowing local governments to implement PACE programs using their (tax) assessment authority. PACE can vary from state-to-state, but generally allows homeowners to finance energy efficiency improvements for up to 20 years through assessments attached to the property.”

“PACE allows homeowners to benefit from the improvements immediately and spread the cost over time. When the property is sold, the PACE loan remains with the property and the next owner is responsible for repaying the loan.”

New rules to be published in the FHA single-family home loan guidebook allow participating lenders, “to evaluate the conditions under which borrowers purchasing, refinancing properties, or modifying their loans with existing PACE assessments will be eligible to use FHA-insured financing.”

The FHA plans to issue guidance at a future date that includes the following instructions for lenders:

–PACE liens that preserve payment priority for first lien mortgages through subordination are eligible;
–PACE assessments must be fixed-rate and fixed repayment schedule;
–PACE assessments must be recorded and identifiable to the lender; and
–PACE assessments must be attached to single family properties, as defined by FHA, which are 1- to 4 unit dwellings.”

More information is available at the FHA/HUD official site at http://portal.hud.gov/hudportal/documents/huddoc?id=FTDO.pdf

Do you work in residential real estate? You should know about the free tool offered by FHA.com. It’s designed especially for real estate websites–a widget that displays FHA loan limits for the counties serviced by those websites.

It is easy to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today: http://www.fha.com/fha_loan_limits_widget

 

FHA Loan Rules, Lender Standards, And Your FHA Loan Application

2015-18a

Some of the most common questions we get asked in the comments section (where we field all our reader questions about FHA loans and refinance loans) involve what seem to be gray areas surrounding an FHA mortgage. For example, “Will a certain condition in the home make the property fail the FHA appraisal?” or, “How low can my FICO score be?”

Some portions of the FHA loan process are dealt with specifically in FHA loan rules. For example, borrowers with FICO scores lower than 500 are not eligible for an FHA loan. Borrowers who are currently delinquent on Federal debts may have difficulty getting loan approval until the situation is resolved with payment or a payment plan. Certain types of conditions–homes located within a high pressure gas pipeline easement, for example–may render a home ineligible for an FHA mortgage.

But not all issues are defined in the FHA loan rulebook in clear terms. There’s a reason for that. FHA loans rely heavily on the discretion of the lender for many situations including overall judgments of credit worthiness of a particular borrower even when FICO scores and other basic FHA minimums have been met. In some cases lender standards apply. In others, state or local laws may also have a say in how the transaction may be carried out.

In these cases, the lender is often the first good source of information about the issue. If your FHA appraisal required corrections or declared the property unfit for an FHA loan, the best thing to do is to ask the lender about the situation–FHA loan rules for appraisals don’t cover each and every single contingency and the FHA doesn’t keep copies of state/local building code.

When it comes to FICO scores, the lender is free to require higher standards in general than those found in the FHA loan rulebook. If you were denied an FHA loan, or are worried you may be denied an FHA loan, due to FICO score issues, it is best to speak to the lender directly to learn what that financial institution’s standards are and how close you may be to meeting them.

It’s usually best to start asking questions at the lender level unless the loan officer has indicated that an application does not meet basic FHA loan guidelines–then it may be worth contacting the FHA about in order to get further clarification. In those cases, you can also ask questions of us here by visiting the comments section. Remember, we are not the FHA and do not represent it or the government in any way–but we do want to help borrowers and potential borrowers get ready for their FHA loan applications.

Do you work in residential real estate? You should know about the free tool offered by FHA.com. It’s designed especially for real estate websites–a widget that displays FHA loan limits for the counties serviced by those websites.

It is easy to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today: http://www.fha.com/fha_loan_limits_widget

 

FHA Refinance Loan Choices

2015-21
When you’re thinking about refinancing an FHA mortgage loan, there are many options to consider. Should you stay with your original lender or does another lender have better terms and/or interest rates? Do you remain in your current adjustable rate mortgage or fixed-rate loan? Do you want cash back in the refinance loan transaction?

All of these are important questions to ask.

You don’t have to stay with the original lender you took out your first mortgage with; regardless of whether you have an existing FHA loan or a conventional mortgage or even an VA loan, refinancing into an FHA mortgage is definitely an option for you.

Your original lender might be willing to offer you better terms since you’re already known at that financial institution, but it’s never safe to assume you’re getting the best deal by staying put.

Some borrowers don’t think about their options when it comes to the nature of the refinance loan. You may have started out with an adjustable rate mortgage, but you can refinance into a fixed-rate FHA loan and get into a more stable type of mortgage payment.You also have the option to apply for an FHA-to-FHA streamline refinance loan (provided you have an existing FHA mortgage) that can help lower your interest rate and/or monthly payments.

You also have the option to apply for FHA cash-out refinancing. This requires both a new appraisal and a credit check, and you would receive cash back once the original loan obligation is paid in full, minus any fees and/or expenses that might be taken out of the remaining amount.

Talk to your loan officer about the terms and conditions of a cash-out refinance as the money you get back on the transaction may be used for “any purpose acceptable to the lender” to include home improvements and other house-related issues, but not necessarily limited to those things.

Do you work in residential real estate? You should know about the free tool offered by FHA.com. It’s designed especially for real estate websites–a widget that displays FHA loan limits for the counties serviced by those websites.

It is easy to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today: http://www.fha.com/fha_loan_limits_widget

 

FHA Mortgage Loan Interest Rate Trends: Creeping Higher

093

You may have noticed we’ve been posting more this week on mortgage loan interest rate trends: overseas economic headlines from China and elsewhere have contributed to a volatile market environment that can definitely affect mortgage loan interest rates, so we’re posting more as the situation warrants.

Mid-week, mortgage rates began creeping higher, but this time influenced by bond market activity–our sources point to a weak five-year Treasury auction that began putting upward pressure on mortgage loan rates in the afternoon on Wednesday, resulting in a range of best execution rates for 30-year fixed rate conventional mortgages between the previously reported 3.875% and 4.0%. Yes,we’re getting back into that old, familiar 4.0% zone, at least in the short term.

FHA mortgage loan rates have not, best execution, budged from the 3.75% comfort zone we’ve been reporting on for some time now. Borrower take note, FHA mortgage loan rates can vary more among participating lenders than their conventional mortgage counterparts.

As always, small, incremental changes in mortgage loan rates may not always be reflected in the rate itself, but may appear as changes in your closing costs.

It’s always a good idea to shop around for the most competitive rates. Remember, the numbers you see reported here are described as “best execution” because they are offered to borrowers with the best FICO scores and other financial qualifications. Your experience may vary.

Going advice in the “lock versus float” department? Some industry pros say lock if you’re closing within 30 days, float if you’re closing later than that. Locking and floating are choices only the borrower can make–it’s a very good idea to do your research, ask your lender for advice, and make the most informed choice possible. Short term trends may or may not last; long term trends depend on a variety of factors that the typical home buyer might not have any experience or expertise in.

Do you work in residential real estate? You should know about the free tool offered by FHA.com. It’s designed especially for real estate websites–a widget that displays FHA loan limits for the counties serviced by those websites.

It is easy to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today: http://www.fha.com/fha_loan_limits_widget

 

Choices To Consider For Your New FHA Home Loan

2015-02Are you considering an FHA home loan? You’ve got plenty of options open to you, but sometimes it’s good to review those options to make sure you aren’t missing any potential avenues for savings or better opportunities.

The choice of lenders is the first thing many borrowers think of when they consider their FHA loan options. It’s perfectly reasonable to consider using the bank you currently have to work with on an FHA loan, provided that company is a participating FHA lender.

But what if your lender doesn’t offer FHA loans, or restricts their offerings to areas you aren’t currently interested in? Some borrowers want to finance condo loans, manufactured housing or mobile homes, etc. Does your lender offer loans for these purchases?

Shopping around for a new lender is always a good idea, even if you wind up going with your first choice or your existing financial institution. It pays to be an informed borrower, and you’ll learn a lot about what interest rates and terms might be available outside your current choice.

Another decision to make when considering your FHA home loan–how much of a down payment can you afford to make, and will you be purchasing any discount points to help reduce the interest rate on your loan?

Do you want to add energy efficient improvements to the home purchased with your FHA loan? The FHA Energy Efficient Mortgage (EEM) program can help you do so, but you’ll need to choose a lender to work with and then discuss the improvements you want to make.

Borrowers interested in 15-year mortgages instead of 30-year loans also have some talking to do with the lender–be sure to ask what the difference in interest rates and terms are for such loans–you may be surprised at the rates when you compare them.

Are you considering the early payoff of your mortgage? Remember that FHA loans don’t permit the lender to penalize you for doing so, which may be different than the terms offered by a conventional lender.

Shop around for a lender, ask a lot of questions, compare rates, and make the most well-informed lender choice you can–that’s a very good start toward your home purchase once your preparation and savings stage is passed and you are ready to buy.

There are many home loan options for veterans of the United States military, including the VA loan program. But some veterans choose the FHA home loan program instead–there are many reasons why some might choose FHA over a VA loan, and for those who are considering the option, there are some important things to remember about the FHA mortgage loan or refinance loan program.

Do you work in residential real estate? You should know about the free tool offered by FHA.com. It’s designed especially for real estate websites–a widget that displays FHA loan limits for the counties serviced by those websites.

It is easy to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today: http://www.fha.com/fha_loan_limits_widget

 

FHA Mortgage Rate Trends: Slightly Higher After Rough Stock Market Tuesday

093Mortgage loan rates weathered the stock market storm on Monday, but Tuesday’s market activity brought slightly higher rates. It’s been a tough time for those watching market activity hoping for a mortgage loan interest rate rally, but numbers are still sub-four percent (best execution) and we even saw reports of some lenders offering 30-year fixed rate conventional best execution rates as low as the FHA comfort zone rate (3.75%) on Monday.

But rates edged higher on Tuesday, putting things more solidly into the previously reported 30-year fixed rate conventional mortgage loan rate of 3.875%-which is still prevalent at the time of this writing. Wednesday’s activity, at the time of this writing, hasn’t even emerged solidly, but it’s definitely going to be an interesting ride to the end of the week.

As mentioned above, 30-year fixed rate conventional mortgage loan interest rates are holding in their best execution rate of 3.875% which we reported last time. How long that rate persists remains to be seen–there’s likely some more up-and-down activity to come as markets get sorted out. FHA mortgage loan interest rates are holding in the 3.75% best execution comfort zone, and if there’s any shift in that rate, it’s likely to be into a range of rates. Whether 3.75% is the upper end of that range or the lower end depends greatly on what happens over the next few days.

Remember, best execution rates assume ideal conditions–your FICO scores and other financial qualifications will play a big part in determining your access to such rates. Your experience may vary. Not all lenders offer these rates.

The going advice from many industry professionals is to lock in the short term, with some saying those 3o days out from closing or more may be more comfortable thinking about floating. There’s always a degree of risk with floating, so consider your options after doing some research and asking plenty of advice.

Do you work in residential real estate? You should know about the free tool offered by FHA.com . It’s designed especially for real estate websites–a widget that displays FHA loan limits for the counties serviced by those websites.

It’s simple to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today at http://www.fha.com/fha_loan_limits_widget.

 

FHA Home Loans For Veterans

american flag

There are many home loan options for veterans of the United States military, including the VA loan program.

But some veterans choose the FHA home loan program instead–there are many reasons why some might choose FHA over a VA loan, and for those who are considering the option, there are some important things to remember about the FHA mortgage loan or refinance loan program.

The first is that FHA home loans and refinance loans offer many similar features to VA loans. For example, veterans applying for an FHA mortgage have the option of getting an Energy Efficient Mortgage (EEM) option added to the loan, much in the same way as the VA loan program.

An FHA EEM requires the lender and borrower to work together to determine the cost effectiveness of any energy efficient improvements to the home paid for under the EEM program, and like the VA version of the EEM, all such improvements must be approved.

FHA loans, similar to VA loans, feature a streamline refinance option. Like the VA program, FHA streamline refinancing is for existing FHA loans only and permits a transaction with no FHA required appraisal or credit check. Unfortunately there is no such thing as a VA-to-FHA streamline refinance option, but those who buy a home with an FHA mortgage can later refinance using the FHA streamline loan.

Like VA mortgages, FHA loans permit a variety of choices when it comes to the type of loan. You can get a 30-year fixed rate or an adjustable rate mortgage. Depending on lender options and borrower qualifications, you can also explore your options for graduated payment mortgages and also refinancing out of adjustable rate loans into fixed rate mortgages.

FHA loan rules permit veterans with existing VA loans to refinance into FHA mortgages. This may be especially tempting for those who have adjustable rate loans and want to get into fixed rate mortgages instead.

Do you work in residential real estate? You should know about the free tool offered by FHA.com . It’s designed especially for real estate websites–a widget that displays FHA loan limits for the counties serviced by those websites.

It’s simple to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today at http://www.fha.com/fha_loan_limits_widget.