June 28, 2017

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Articles Published in: March 2017

FHA Appraisal Rules: When Corrections Are Required

The FHA appraisal process is a typical part of purchasing a home. The appraisal establishes the fair market value of the property and also insures the home meets minimum FHA loan standards. These standards are know as MPS and MPRs-Minimum Property Standards and Minimum Property Requirements, respectively. While the FHA appraisal is not designed to catch any/all problems with a home, it is a tool for the lender to use to determine whether the property is acceptable or not. Whether you’re applying for a fixed rate mortgage or adjustable rate loan, purchasing a condo, town home, or manufactured home, each transaction is subject to the FHA appraisal process. What happens if the appraiser reviews the property only to find issues that do not meet FHA minimum standards? The answer is | more...

 

Hazard Insurance For FHA Loans

A reader got in touch recently with a question about hazard insurance and FHA mortgages. “Were fixing to close on a home and theyre telling us that we have to have a shed that is on the lot covered with flood insurance. Is this correct and how much coverage do you have to have on a shed if youre in a flood zone?” We get a large number of “Is this correct?” type questions. Some ask because they don’t realize that FHA loan rules aren’t the only ones that must be followed in a mortgage loan transaction. If the requirement is made by the lender, that lender’s standards would apply as long as the standards are in accordance with FHA loan guidelines, state law, and federal law. So the “Is | more...

 
Mortgage Loan Rate Trends

Mortgage Rate Trends: Moving Lower

Since our last mortgage rate report, the overall trend has been downward in the short-term. Over the past several business days we have seen rates see-saw back and forth within a certain range, but at the time of this writing, rates are lower than when we reported on them last. 30-year fixed rate mortgages are at 4.25%, best execution. That’s in the middle of the range we last reported, with 4.375% at the upper end and 4.125% at the lower end. FHA loans are finally seeing a mortgage rate range falling back into the sub-four percent range; depending on the lender FHA mortgage rate numbers are reported between 3.75% and 4.25% best execution. Remember, “best execution” refers to rates offered to extremely well-qualified borrowers with outstanding FICO scores and other | more...

 

Cosigners and Co-Borrowers On FHA Loans

In our previous blog post we discussed an FHA loan reader question about co-borrowers and their status. What is the basic difference between a cosigner and a co-borrower and how does an FHA loan work in such cases? FHA loan rules in HUD 4000.1 differentiate between a cosigner and co-borrower; the cosigner, while liable for the loan, does not have any ownership in the property. The co-borrower has both financial responsibility and ownership. Both cosigners and co-borrowers must have a legal primary residence in the United States or be U.S. citizens. Borrowers, co-borrowers, and cosigners all must provide basic information to the lender including Social Security numbers. Co-borrowers and cosigners are subject to the rules of HUD 4000.1 that restrict who can participate in an FHA loan transaction: “A party | more...

 

FHA Loans With A Non-Occupying Co-Borrower

How does having a non-occupying co-borrower affect your FHA mortgage? What happens if one of the borrowers decides they want a change in their status as occupying or non-occupying? A reader asked us a question along these lines recently in the comments section: “I just purchased my home in November 2016 with my husband’s uncle as a co-borrower (not living in the property). Now he is getting a divorce and his soon-to-be ex-wife wants the househe basically just helped me qualify of put the down payment to purchase and pay the mortgage on my ownhe even signed hes rights to the title the day we signed for the property is I was told. I could put in that paper after about 6 months of having the property but now I | more...

 

FHA Refinance Loans For Home Improvements

Weve been discussing FHA refinance loan options in our recent blog posts, and home improvements are one important option for those with existing FHA mortgages or non-FHA loans alike. How can FHA refinance loans help a borrower make upgrades or improvements? There are multiple programs available through participating FHA lenders including the FHA Energy Efficient Mortgage program (EEM), and FHA Rehab loans. Most of these options will require the borrower to work more closely with the lender to determine what may be funded using FHA refinance loans, but many projects are possible. For FHA Energy Efficient Mortgages, borrowers can apply to add funds to the refinance loan for upgrades that result in lower utility bills, including approved solar heating systems, storm windows or doors, or other alterations. The borrower will | more...

 

FHA Refinance Loans For Lower Interest Rate Or Fixed Rates

FHA refinance loans are an option for borrowers with existing FHA mortgages. But there are also options for non-FHA borrowers to refinance into FHA loans and get the benefits of having a lower interest rate or other options that come with FHA mortgages. Refinancing a home loan can have a variety of benefits depending on the financial needs and goals of the home owner. There are many reasons to refinance including the desire to get into a lower interest rate, to get out of an adjustable rate mortgage, and sometimes even to fund repairs and upgrades to the property. What does it mean to refinance a home loan? The answer depends on the type of transaction you need and the reasons you wish to refinance. For those who are looking | more...

 

FHA Loans and Co-Signers: A Reader Question

A reader asked us a question about FHA loans and co-signers recently. “If I cosigned for a friend and he refinanced to get everything put in his name and me taken off, am I eligible for an FHA loan for my own home?” FHA mortgage loan requirements refer to co-signer arrangements and “contingent liabilities”. HUD 4000.1 says: “A Contingent Liability refers to a liability that may result in the obligation to repay only when a specific event occurs. For example, a contingent liability exists when an individual can be held responsible for the repayment of a debt if another legally obligated party defaults on the payment. Contingent liabilities may include Cosigner liabilities and liabilities resulting from a mortgage assumption without release of liability.” If the reader’s circumstances meet that definition | more...

 

FHA Loan Rules For Part-Time Income

A reader asked us a question in the comments section this week about part-time income and how it may or may not qualify as verifiable income for an FHA loan. The reader asks: “My file is with the underwriter for review, they have asked for an VOE from my employer but they stated I work 16 hours a week (position hired into) but I always work more the 16 hr a week for the last 5-6 months and I’m going to continue to work more then that, they have already seen check stubs and both w2 from 2015 and 2016. Could this deny me for my loan?” We first have to determine what the FHA definition of part-time income. HUD 4000.1 gives lenders guidance in this area beginning with the | more...

 
FHA loan

FHA Loans For Non-Standard Properties

In a recent blog post we discussed FHA loan requirements for properties that had non-residential zoning or other non-standard features that could make it subject to local zoning laws or other ordinances. But what about properties that may be zoned residential, have all the usual characteristics of a residential property or typical home, but are still considered non-standard? FHA mortgage loan rules in HUD 4000.1 address such conditions. On page 498, in the section where appraisal rules are located, there is a section titled Non-Standard House Styles, which includes the following: Non-Standard House Style refers to unique Properties in the market area, including log houses, earth sheltered housing, dome houses, houses with lower than normal ceiling heights, and other houses that in the Appraisers professional opinion, are unique. Note that | more...