June 25, 2017

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Articles Published in: June 2016

HUD Publishes Early Findings From Home Buyer Literacy Study

Financial literacy is an important part of being a well-informed home buyer. For those just starting out on the journey toward home ownership, there can be a great deal of learning to do; how FICO scores affect your ability to purchase a home, how open lines of credit can and often do factor into a lender’s decision to approve or deny a mortgage, etc. HUD launched a study to see how home buyer education and certain types of financial counseling might make a difference to house hunters. According to a recent press release at the HUD official site, “The U.S. Department of Housing and Urban Development (HUD) today published early findings from a rigorous, large-scale, random assignment study on the benefits that housing education and counseling provides to first-time homebuyers.” | more...

 
Mortgage Loan Rate Trends

Mortgage Rate Trends: Holding At Multi-Year Lows

Mortgage rates are still holding at or near 36-month lows. Brexit drama continues to be a factor in the low rates, but some market watchers believe that we’re about to see the first increase in rates soon, if for no other reason than what’s termed “bond market weakness” that could be an indication things are about to change soon. But there is a three-day weekend ahead, and things tend to get a bit conservative around the holiday. Rates could, based on previous holiday activity, go into “defensive mode”, not changing dramatically one way or the other. On the other hand, we have seen assumptions like that proven wrong due to breaking news, changes in investor behavior, etc. In other words, yes rates are low now, but it’s not safe to | more...

 
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FHA Loan Questions: Legal Ownership Of A Property To Be Refinanced

A reader asks, “I have a FHA loan that I received with my ex wife we have been divorced for approx. 7 years. Due to the amicable nature of the divorce we did not specify that I would keep possession of the house, we have a gift of deed.” “But the mortgage company says I can not refinance because there is no clause in the divorce decree about house ownership transfer. Wouldn’t the deed of gift be a legal binding document to prove ownership?” FHA loan rules found on page 126 states, “A refinance transaction is a new Mortgage for a Borrower with legal title on the same Property with the proceeds used to pay off any existing liens”. We don’t give out legal advice or opinions here as it’s | more...

 
FHA Loan Credit Score

FHA Loan Questions: Overtime Pay

We get many questions in our comments section about how FHA loan rules may apply to a specific situation with regard to employment, pay, and verifiable income. Some potential borrowers want to know if having frequent changes of employment will negatively affect an FHA loan application (not necessarily) and others want to know if their new commission income will count towards their “effective income” (it depends on how long the commission income has been earned and whether it’s likely to continue). Still others want to know how the question of overtime pay is handled in the FHA loan rulebook. Recently, one reader asked: “I previously worked in law enforcement (resigned in September of 2015) and I obtained a job in another industry which pays me double my previous salary. I | more...

 

FHA Loans: Calculating The Monthly Mortgage Payment

One of the most important questions a home loan applicant can ask is, “How much will my monthly mortgage payment be?” While this may seem to be a simple calculation of how much the loan is, divided by how many months the mortgage loan payments are required, the truth is that it’s more complex than that. Mortgage loan applicants have a variety of online mortgage calculators to help them arrive at estimates, but what actually goes into the calculation of your monthly mortgage payment? If it’s not a simple matter of taking the loan amount and dividing it by the number of months the loan term is set for, what DOES go into those calculations? There are a variety of things. The basic calculation we mention is part of it, | more...

 
Mortgage Loan Rate Trends

Mortgage Rate Trends: Still Moving Lower After Brexit Vote

Mortgage loan rates dropped sharply after the news of the Brexit vote last week, and the fallout from that outcome is still affecting mortgage rates in the short term. The popular vote in Britain to leave the EU is not legally binding-the government there must still make procedural moves to actually depart, and there’s some uncertainty over when or even IF that might happen. Talk of a second referendum is in the news, as well as talk about the “what if” notion of the government in Britain simply doing nothing, not departing the EU in spite of the vote. That, of course, is very much in the realm of speculation at the time of this writing. What does all this mean at home? That investors are still reacting to the | more...

 

FHA Loans: Terms and Definitions You Should Know

Are you thinking about buying a home with an FHA mortgage or refinancing a current mortgage loan? If you are new to either process, or if it’s been a long time since you purchased your first home, there may be terms and definitions you need to re-familiarize yourself with. Here are some basics you should know: FHA single-family home loans are what most borrowers are after when they want an FHA mortgage to purchase a home, town home, condo, manufactured home, etc. The idea is basically that the home purchased with the FHA loan is an owner-occupied property which is primarily residential in nature, and where at least one of the borrowers or co-borrowers will live once the loan is closed. Occupancy requirements refer to the FHA policy that single | more...

 
Mortgage Loan Rate Trends

Mortgage Rate Trends: Sharply Lower Following Brexit Vote

For five straight business days prior to the Brexit vote, mortgage loan rates moved higher. Investor reaction to the anticipation of the vote played an important part in this; uncertainty over the outcome of the vote and what the vote might do to markets added potential volatility to the daily ups and downs for mortgage loan rates in general. Then the Brexit vote happened, the majority spoke, and investors reacted accordingly. The result? A major shift lower for mortgage rates on Friday, one not seen since well over a year ago. Rates moved lower in one day than they have in all that time, resulting in 30-year fixed rate mortgage best execution rates to fall down 3.5%. FHA mortgage loan rates finally shifted out of their comfort zone during Brexit | more...

 
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FHA Loan Questions: Co-Borrowers

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 own name or a Living Trust at settlement, be obligated on the Note or credit instrument, and sign all security instruments. In community property states, the Borrowers | more...

 

FHA Loan Questions: Self Employment

A reader asks, “I am working on getting an FHA loan and my lender asks that I provide W2s. I am self employed via my own business as well as had a regular job how will this affect my loan being that i have no W2 and that my taxes were done via 1099 and 1040 forms for myself and my business?” In cases like these, the lender will require whatever tax documentation that is available to show proof of income. For self employed borrowers, the lender may also require additional documentation such as profit and loss statements, business plans, and other items that may be required. Lender standards will apply so FHA loan rules and minimums are only part of the equation. FHA loan rules in HUD 4000.1 do | more...