Articles Published in: August 2015

August 25, 2015

Preparing For Your FHA Loan Application

There are several factors that affect your FHA loan application. Some begin the journey to home ownership with methodical planning and research, others may become interested after seeing an ad or a home for sale that looks particularly tempting. If you’re brand new to the home loan process, here are some steps that can help you get ready to make the tough choices about your home and FHA loan options. Know Your Market Which homes in which neighborhoods have the most competitive prices? Is the housing market in your area on the rise? Is it changing due to construction or new development in areas that were under-utilized or previously blighted? What would your new neighborhood offer you in terms of services such as shopping, day care, etc.? Know Your Lenders | more...

August 25, 2015

FHA Mortgage Rate Trends: Slightly Lower As Stock Market Varies

By Joe Wallace

Mortgage rates were, in the eyes of some observers on Monday, quite conservative in the shadow of stock market ups and downs. Rates did creep a bit lower, putting 30-year fixed rate conventional mortgages solidly into 3.875% territory, best execution. That eliminates the previous range of best execution rates for 30-year fixed conventional rates that saw 3.875% at the low end. FHA mortgage loan rates are still in their comfort zone of 3.75% best execution, though as always rates may vary more among participating FHA lenders. Best execution rates are not available to all borrowers or from all lenders–your experience may vary depending on your FICO scores and other financial qualifications. The availability of a participating FHA lender may also play a role in your access to rates like theses. | more...

August 24, 2015

FHA Loans And Non-Purchasing Spouses

By Joe Wallace

There are a lot of questions asked about FHA loans and how spouses can buy together. Can the FICO scores of one spouse make up for the lower scores of the other borrower? Can one spouse’s income offset the lower income of the other? How does state law factor into FHA loan applications when spouses apply? All valid questions. But what about circumstances where one spouse is not borrowing? Does an FHA loan require action on the part of a non-borrowing spouse? The answer can be influenced by state law, lender standards, and FHA loan regulations. At the time of this writing, FHA loan rules that govern non-purchasing spouses can be found in HUD 4155.1 Chapter Four, Section A. There we learn the following: “If required by state law in | more...

August 24, 2015

FHA Loans For Borrowers With Past Delinquencies, Defaults, Or Claims On FHA Mortgages

By Joe Wallace

Of all the questions we get in our comments section about FHA loans, one of the most common topics involves new FHA loans for borrowers who have past bankruptcies, judgments, foreclosures, etc. The answers to these questions depend greatly on circumstance, but what do the FHA loan rules have to say specifically about those who want to apply for a new FHA mortgage, but have had problems with a previous FHA-guaranteed loan? The answers to these questions can be found, at the time of this writing, in HUD 4155.1, Chapter Four, which instructs the lender as follows: “If the borrower has had past delinquencies or has defaulted on an FHA-insured loan, there is a three-year waiting period before he/she can regain eligibility for another FHA-insured mortgage. The three-year waiting period | more...

August 22, 2015

Mortgage Rate Trends: Moving Lower

By Joe Wallace

Mortgage rates closed out the week by moving lower–some sources are labeling the current rates as the lowest in over three months. Rates edged higher ahead of the release of Fed meeting minutes, but every day after that (for three days in a row) there has been some form of improvement. That three-day improvement helped bring 30-year fixed rate conventional mortgage loans back into a range of rates with 4.0% at the upper end of the range and 3.875% at the bottom end, best execution. FHA mortgage loan rates, best execution, haven’t shifted out of the 3.75% comfort zone, but chances are good that if the improvement continues we’ll see FHA rates follow suit and move into a range of numbers with 3.75% at the high end. Again, that’s assuming | more...

August 21, 2015

FHA Single Family Home Loan Rules On Owner-Occupier Status and Investment Properties

By Joe Wallace

FHA loan rules on the nature of “owner-occupied” residences state that a single-family mortgage loan guaranteed by the FHA is only for borrowers who want to live in the home they buy. The “owner occupier” nature of FHA home loans is secured by rules in HUD 4155.1 designed to prevent investors from using this type of FHA mortgage. You’ll find the guidelines for owner-occupied residences in Chapter Four, Section B, which states: “At least one borrower must occupy the property and sign the security instrument and the mortgage note in order for the property to be considered owner-occupied. FHA security instruments require a borrower to establish bona fide occupancy in a home as the borrowers principal residence within 60 days of signing the security instrument, with continued occupancy for at | more...

August 21, 2015

FHA Mortgage Rate Trends: Lower After Fed Minutes Are Released

By Joe Wallace

Mortgage loan rates have been in a back-and-forth mode this week. One day they rise, altering closing costs for the most part rather than the actual best execution rate, the next day they fall, with the same result. On Wednesday all eyes were on the release of Fed minutes, which detail the meeting held last month. The details of that report sent investors into activity that benefits mortgage rates, and while the best execution numbers we reported in our last blog post haven’t changed, some borrowers may notice the alterations in the form of lower closing costs as previously mentioned. 30-year fixed rate conventional mortgages were reported at 4.0% best execution at mid-week, with some lenders coming in at sub-four percent best execution rates. Best execution rates are not available | more...

August 20, 2015

FHA Loan FICO Score Requirements: Your Mileage May Vary

By Joe Wallace

One of the most common questions about FHA home loans centers around FICO scores. Many borrowers wonder why their FICO scores may or may not be good enough to get FHA loan approval. FHA loan rules have minimum FICO scores defined in HUD 4155.1, but the confusion comes when a borrower who knows these minimums gets told their scores aren’t high enough for maximum financing or loan approval, depending on circumstances. The reason for this is simple: FHA loan minimums aren’t necessarily the lender’s minimum standards for FICO scores. The lender is free to require higher FICO minimums as long as that requirement is enforced in compliance with federal law. The minimum FHA FICO score requirement of 580 or better for maximum financing isn’t always what the lender will require–your | more...

August 20, 2015

FHA Announces New Initiative To Help Expand Credit To Borrowers

By Joe Wallace

The FHA has announced a new initiative designed to help the agency review lending practices of participating lenders and expand credit to potential FHA borrowers. According to HUDNo.15-107,”The Federal Housing Administration today announced a new method for evaluating the lending practices of FHA-approved lenders and understanding the sorts of borrowers they are serving.” That new standard, known as the FHA Supplemental Performance Metric, is designed to enhance the FHA’s existing “compare ratio” and according to the press release, “offer more nuanced insight into a lenders specific performance while encouraging lenders to serve eligible underserved borrowers.” This, the press release says, will assist participating FHA lenders in reviewing the effects of their FHA lending, “at all ends of the credit spectrum in line with FHAs willingness to insure loans to eligible | more...

Can I buy a manufactured home with an FHA loan?

August 19, 2015

FHA Loan Rules For “Qualifying Ratios”: Your Debt-To-Income Ratio

By Joe Wallace

We write a great deal about what it takes to qualify for an FHA loan–income verification, FICO scores, employment history, sources of down payment funds, etc. But there’s a very important part of the FHA loan application data you submit that the lender will review to insure you can actually afford your new loan. Borrowers are required to submit their income and employment data to the lender; the lender is required to do calculations based on that data to see what your debt to income ratio is–the amount of money you have coming in from verifiable sources versus the amount you have going out in monthly financial obligations. If your debt to income ratio is too high, you may have trouble qualifying for an FHA mortgage. But what is the | more...