December 12, 2017

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Articles Published in: December 2010

Refinancing with an FHA Reverse Mortgage

FHA HECM loans are designed for borrowers who are 62 and older who want to take advantage of the equity built up in their homes. HECM, which stands for Home Equity Conversion Mortgage and is also known as an FHA Reverse Mortgage, allows qualified borrowers to apply for an FHA loan which uses equity as the security for the loan. HECM loans have no monthly mortgage payments. The borrower pays off the loan in full if the property is sold or the borrower dies. Because of the structure of FHA HECM loans, the borrower can use the proceeds from the loan as a line of credit, choose to get monthly payments instead, or a combination of the two.

 

FHA Home Loan Down Payment Rules

Most FHA home loan programs require the borrower to make a minimum down payment of 3.5% of either the appraised value of the property or the asking price of the home, whichever is lower. The downpayment is strictly regulated. The buyer is not only required to put down his or her 3.5%, but the FHA also requires documentation on the source of the down payment money in many cases. Documentation is required when the borrower pays more than 2% of the sale price. It's also required in any situation where the lender has certain questions about the down payment. According to FHA requirements, documentation is needed when the down payment "appears excessive based upon the borrower

 

Is There a Minimum Credit Score For FHA Loans?

As with many government programs, the rules and requirements for FHA home loans change often. Some alterations come as part of new legislation designed to close loopholes that could threaten the fairness of the FHA mortgage loan process, others come as a way to update or modernize existing FHA loan programs. Because of such changes, the FHA loan program some potential borrowers explored a year or more ago, but didn't act on at the time, may have changed in the interim.

 

FHA Reverse Mortgage Options

FHA HECM loans or reverse mortgages are designed for borrowers age 62 and older. These mortgages are designed to let qualified applicants take out a loan against the equity in the home--loans that can be used for living expenses, home improvements, even the purchase of a primary residence if the borrower is willing to pay (in cash) the difference between the FHA HECM loan amount and the sales price and closing costs. According to the FHA, HECM loans differ from typical home loans or second mortgages because, "no repayment is required until the borrower(s) no longer use the home as their principal residence or fail to meet the obligations of the mortgage."

 

FHA Home Loan Fees

Every home loan comes with associated fees, whether it's an FHA mortgage or conventional home loan. Knowing the fees up front can help house hunters budget for the ones they must pay up front and understand which ones can be rolled into the amount of the loan when permitted by FHA regulations. FHA loan fees include the loan origination fee, which includes the administrative cost of doing business with your chosen lender. There are also title search and examination fees and legal fees which must be paid.

 

Making Home Affordable Refinancing and Loan Modification

n 2009, the Obama Administration created a plan to help the American economy recover from a serious financial crisis. Part of that plan included stabilizing the troubled housing market and reduce the amount of foreclosures. The Making Home Affordable program was introduced to help struggling home owners avoid defaulting on their loans, including FHA mortgages and equivalent programs for VA home loans. Under the Making Home Affordable program, several loan modification and refinancing options became available. Those with FHA loans who qualify for help under these programs have many options to save the home, prevent foreclosure and get back on track with their mortgage payments.

 

FHA Mortgages: 30-Year Loans & 15-Year Loans

No two FHA mortgages are the same. House hunters have a variety of terms, interest rates, closing costs and other considerations to think about when applying for an FHA mortgage loan on a particular property; one of the most important decisions is the length of the loan itself. FHA home loans for typical residential neighborhood homes come in 15-year and 30-year terms. There are a variety of compelling reasons to choose both--there is no strong argument for or against either term. It all comes down to what the individual buyer needs and wants from their mortgage. The buyer's perspective determines a great deal when it comes to deciding which to choose. A 30-year loan has buyer paying off more interest than principal in the early days of the FHA mortgage.

 

FHA Mortgages and Non-Occupying Co-Borrowers

First time FHA loan applicants soon learn the world of FHA loans is aimed at helping people who want to become homeowners; a fairly obvious assumption to make when dealing with a government agency with a mission statement that includes helping people achieve their dream of home ownership. But private home owners aren't the only ones interested in buying and selling real estate; that's one of the reasons for the strict FHA requirements that single-family FHA home loan borrowers certify the property is to be used as the primary residence. FHA mortgage loan rules forbid using FHA home loans to buy real estate for investment purposes.

 

FHA Appraisals : Are They Fair?

In our last post we discussed the cost and process of FHA appraisals. Since the FHA appraisal is such an important part of the FHA mortgage process--the loan amount can't be established without the appraisal--it's good to know how and why the process works the way it does. One of the key aspects of getting a fair, accurate estimate of the reasonable market value of a home is the independence of the appraiser. How does the first time FHA borrower know the FHA-approved appraiser is assigning value to the home for sale that's actually consistent with market practices rather than helping the lender raise the FHA loan amount by over-valuing the property?

 

How Much Does an FHA Appraisal Cost?

Part of the FHA home loan process is establishing the reasonable value of the home for sale. The reasonable value is not necessarily the asking price, but rather the estimated market value of the property based on the work of a licensed, FHA-approved appraiser. The appraisal is a crucial part of the FHA loan process; without it, the loan can't move forward. The FHA will not insure or guaranty a loan amount for more than the reasonable market value of the property (with approved extra costs such as energy-efficient upgrades and other items approved by the FHA to be included in the FHA loan amount).