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Articles Published in: August 2012

August 8, 2012

Veterans and FHA Loans: The National Housing Act

By Joe Wallace

A reading of the VA Lender’s Guide, which establishes rules for lenders processing home loans for qualified veterans under the VA Loan program, reveals an interesting section titled, “Certificate of Veteran Status – FHA Loans”. Modified on April 6, 2012 to make minor grammatical edits, this section of the VA loan rulebook pertains directly to veteran borrowers who seek FHA guaranteed home loans. According to this portion of the VA loan rulebook, “General Section 203(b)(2) of the National Housing Act permits a veteran to obtain slightly better terms than a non-veteran when obtaining Federal Housing Administration (FHA) mortgage financing. Although this involves FHA loans, VA is charged with making the entitlement determination for benefits under this provision.” How does the VA accomplish this? “VA will issue a VA Form 26-8261, | more...

 

August 3, 2012

FHA Loan Reader Questions: Down Payment Funds From Signature Loans

By Joe Wallace

A reader asks, “Does FHA allow a down payment coming from a signature loan with special insurance; in the event of unemployment the payments are made and in the event of death the loan is paid in full?” “The money is not coming from a 401k, or a cash advance from a credit card, or any other asset.” FHA loan rules for down payment funds are strict. HUD 4155.1 Chapter Five covers what is considered acceptable sources of down payment funds, stating, “Funds used to cover the required minimum downpayment, as well as closing costs and fees, must come from acceptable sources and must be verified and properly documented.” The FHA does not allow borrowers to make down payments on FHA home loans using funds obtained from credit card cash | more...

 

August 2, 2012

FHA Loan Down Payment Rules-What Borrowers Should Know

By Joe Wallace

A reader recently asked us in the comments section, “I am in the process of selling my home & looking to buy another house.” “My question is: do I have to have the money for the down payment & any closing costs in my checking or savings account prior to the closing date or can the procedes from the sale of my home be used for that?” FHA guaranteed home loans usually require a down payment, and the source of that down payment money is strictly regulated by FHA rules. According to HUD 4155.1 Chapter Five, Section B: “Under most FHA programs, the borrower is required to make a minimum downpayment into the transaction of at least 3.5% of the lesser of the appraised value of the property or the | more...

 

August 1, 2012

FHA Loan Prequalification: Does It Expire?

By Joe Wallace

A reader asked recently whether pre-qualification for an FHA home loan has an expiration date. The answer to that question depends greatly on the lender’s policies for pre-qualifying, but there’s a related issue that some borrowers may confuse with pre-qualification–interest rate lock-ins. Pre-qualifying is when an FHA loan applicant applies in advance for an FHA loan amount. The lender will tentatively approve an FHA loan amount based on the borrower’s application data and credit worthiness, but the real FHA home loan isn’t finalized until an offer is made, the appraisal has been accomplished and all the other usual procedures are finished. Pre-qualification is a way for the lender to know approximately how much loan he or she can afford and house hunt accordingly. The interest rate lock-in period is different | more...