Articles Published in: November 2010

November 18, 2010

Home Inspection Advice for FHA Borrowers

FHA appraisals, which are not the same as independent home inspections, are conducted for three reasons. According to the FHA, appraisals are conducted, "To estimate the market value of the property...to make sure that the property meets FHA minimum property requirements...(and) to make sure that the property is marketable." FHA borrowers should pay for an independent inspection of the home for two important reasons--the first being that FHA appraisals will only catch problems that are "readily observable" by the appraiser.

November 18, 2010

FHA Appraisals VS. Home Inspections

By Joe Wallace

here are two specific fees associated with government home loans that a borrower should anticipate paying for. One is to cover the cost of an FHA appraisal, the other is for a home inspection. The home inspection is voluntary, and the FHA appraisal is required as part of the FHA loan process. A home inspection may be voluntary, but smart house hunters don't consider the inspection an option. The home inspection gives the buyer the ability to purchase the home with confidence, knowing they have had a trained set of eyes review the property and report any shortcomings, defects, flaws or potential problems the buyer might encounter once they've purchased the home.

November 17, 2010

Government Home Loans and Anti-Discrimination Laws

By Joe Wallace

The FHA and Department of Housing and Urban Development have an aggressive anti-discrimination policy. FHA home loans are meant for all qualified applicants regardless of race, color, national origin, religion, sex, familial status or disability. Most people are aware that refusing to issue credit, show a home or approve an application for those reasons is illegal. Even in so-called gray areas such as a loan applicant on maternity leave or suffering from a temporary disability that affects the ability to earn a paycheck have been challenged successfully; a lender or real estate agent can't refuse to do business with a qualified applicant in such cases.

November 16, 2010

What is FHA Mortgage Insurance For?

By Joe Wallace

On the surface, FHA mortgage insurance seems designed mainly to protect the lender's interest. FHA mortgage insurance is designed to mitigate the bank's losses in case the FHA loan goes into default and foreclosure. But this insurance does more than just protect the FHA lender--it also helps the buyer. The Housing and Economic Recovery Act of 2008 requires FHA mortgage insurance on all new FHA mortgages. The FHA loan applicant must, once approved, pay for this insurance--costs that include an up-front mortgage insurance premium and monthly insurance payments along with the mortgage. The fees and terms of FHA mortgage insurance depends on what kind of FHA loan the borrower wants. Other factors include the length of the loan term, and loan amount to property value ratio.

November 15, 2010

Who Selects the FHA Appraiser?

By Joe Wallace

When applying for a loan to purchase a home with an FHA mortgage, the appraisal of that home is one of the most important steps in the process. Without an FHA appraisal, the entire process is stalled after a certain point until the job is done. FHA appraisals require the buyer to anticipate fees associated with doing the work, and the seller must anticipate costs associated with repairing items that could lower the appraised value of the property.

November 15, 2010

FHA PowerSaver Loans Announced

By Joe Wallace

In November 2010, the Department of Housing and Urban Development announced a pilot program that offers qualified FHA loan applicants a low-cost loan to help homeowners install energy saving upgrades to their homes. The new FHA PowerSaver loan is scheduled to be offered in conjunction with a program called Recovery Through Retrofit which was launched by Vice President Joe Biden in 2009. The new FHA PowerSaver loan is substantial--up to $25,000 for qualified FHA loan applicants--and can be used to install insulation, solar panels, geothermal energy systems and much more.

November 12, 2010

Do FHA Loans Require a Criminal Background Check?

By Joe Wallace

There are many steps to take on the road to home ownership. When applying for an FHA mortgage, some of those steps include furnishing information to help the FHA determine whether an applicant is a good credit risk. FHA requirements include a credit check that includes residency information, employment history and other details to give an accurate picture of an applicant's background as it relates to paying bills on time and maintaining good credit.

November 11, 2010

Does the FHA Require an Escrow Account for FHA Mortgages?

By Joe Wallace

In our last post, we discussed escrow accounts, which a lender may require to be set up in connection with an FHA loan in order to pay mortgage insurance, property taxes and other expenses with no fear of missed payments or penalties for late payments. When a lender sets up an escrow account in the buyer's name for these purposes, they often add the costs of the insurance and other payments into the mortgage, making one simple payment for the buyer. The extra money is placed into escrow and held until it is needed to pay the insurance, taxes or other items.

November 11, 2010

What is an Escrow Account and Why Do I Need One for an FHA Loan?

By Joe Wallace

If you're thinking of buying that first home, you've probably read plenty of real estate articles and brochures with a wealth of new vocabulary. One of these is "escrow". Until applying for an FHA home loan, many people have never needed an escrow account so it's no surprise that "What is an escrow account and why do I need one for an FHA mortgage?" is such a common question.

November 10, 2010

Can Veterans Apply For FHA Loans?

By Joe Wallace

Military veterans eligible to use the VA home loan program have a very important benefit they can use to get affordable housing. So why would a vet consider using an FHA home loan? After all, both VA loans and FHA mortgages offer similar things--a guaranteed loan backed by the government that makes the borrower more attractive to the right lender.