Articles Published in: February 2016

Can I buy a manufactured home with an FHA loan?

February 4, 2016

FHA Loan Assumption Rules (Part 2)

In a recent blog post we discussed the rules for assuming an FHA mortgage. FHA home loans are assumable in most cases with the participation and approval of the lender. HUD 4000.1 spells out the rules for all FHA single family home loan assumptions including outlining when a down payment may be required and when a credit check is necessary. For borrowers who assume an FHA mortgage with the intent of using the property as the primary residence, no down payment is usually required. Regardless of whether a down payment is required or not, one important question about loan assumptions for the “seller” of the home remains–is the original owner of the property released from liability once the FHA loan is assumed by the “buyer”? According to HUD 4000.1, “The | more...

When Is An FHA Loan Better Than A Conventional Loan?

February 3, 2016

FHA Loan Assumption Rules In HUD 4000.1

By Bruce Reichstein

FHA home loans permit the home owner to have the mortgage assumed by another person, who would become the owner of the property and financially responsible for the mortgage. FHA home loans were, long ago, considered “freely assumable” with no real participation required of the lender. Later, the FHA loan rules changed to require lender participation and approval of an FHA loan assumption. Late last year, the FHA and HUD issued HUD 4000.1, which is the definitive rule book and policy manual for the FHA single family home loan program. Many changes, updates, and restatements of FHA/HUD policies were published in HUD 4000.1, and we’ve been examining some of the most important passages in the new rule book to help borrowers, lenders, and real estate agents stay current on FHA | more...

February 3, 2016

Mortgage Rate Trends: Hitting New Lows

By Joe Wallace

In the last four business days, we’ve seen the phrase “new lows” applied to the general downward momentum of mortgage loan interest rates. Overseas economic woes are partly responsible for this downward movement–tumbling oil prices and stock market trends are helping push rates lower. Some market watchers are beginning to label this downward momentum a trend. Regardless of whether what we’re seeing now is a short-term gain before a return to later 2015 behavior or not, it has been quite some time since 30-year fixed rate conventional mortgages have strayed into the sub-3.75% zone. And that is the best execution rate some competitive lenders are quoting–3.625%. Our sources report other lenders still offering best execution rates in the 3.75% range, but if the downward movement carries on, it may not | more...

February 2, 2016

FHA Mortgage Loan Down Payment Rules

By Joe Wallace

FHA loans require a minimum down payment of 3.5%–that’s typical for many FHA mortgages. In some cases, depending on the nature of the loan and the borrower’s financial qualifications and FICO scores, the required down payment may be higher. But no matter what the down payment amount might be (and it will vary from loan to loan) the FHA has specific rules governing the sources of and verification for down payment funds. The FHA loan rulebook for single family mortgage loans is HUD 4000.1, which refers to the down payment as a “minimum required investment”: “Minimum Required Investment (MRI) refers to the Borrowers contribution in cash or its equivalent required by Section 203(b)(9) of the National Housing Act, which represents at least 3.5 percent of the Adjusted Value of the | more...

February 2, 2016

FHA Loan Rules In HUD 4000.1: Inducements To Purchase (Part 2)

By Joe Wallace

In our last blog post, we discussed FHA loan rules found in HUD 4000.1 on inducements to purchase and what happens if a seller or other interested third party contributes more toward closing costs or other allowed expenses than is allowed by FHA mortgage loan rules. According to HUD 4000.1, “Inducements to Purchase refer to certain expenses paid by the seller and/or another Interested Party on behalf of the Borrower and result in a dollar-for-dollar reduction to the purchase price when computing the Adjusted Value of the Property before applying the appropriate Loan-to-Value (LTV) percentage.” This information is helpful–but what constitutes an inducement to purchase? HUD 4000.1 lists them–they include but are NOT limited to the following: –contributions exceeding 6 percent of the purchase price; –contributions exceeding the origination fees, | more...

February 1, 2016

FHA Mortgage Loan Rules In HUD 4000.1: Inducements To Purchase

By Joe Wallace

There are many rules for FHA home loans that govern what buyers and sellers can and cannot do. For example, the borrower must make a minimum down payment, and the source funds from that down payment cannot come from credit card cash advances or payday loans. But there are rules for the seller (and interested third parties) as well. Did you know FHA loan rules govern what a seller can and cannot contribute towards the purchase of the property? In some cases there are contributions that are permitted but only within certain limits. From HUD 4000.1, we learn the following: “Interested Parties may contribute up to 6 percent of the sales price toward the Borrowers origination fees, other closing costs and discount points. The 6 percent limit also includes: –Interested | more...

February 1, 2016

Mortgage Rate Trends: Decisive Move Lower

By Joe Wallace

Friday saw mortgage rates moving decisively lower. Some very competitive lenders are offering best execution rates at 3.625% for 30-year fixed rate conventional mortgages according to our sources, but a more likely best execution rate on this type of home loan is around 3.75%. FHA mortgage loan rates are, best execution, still holding in the 3.5% comfort zone. But if there continues to be strong improvement in rates, or smaller amounts of improvement over a sustained period of time, we could see FHA rates break out into a range of rates with 3.5% at the upper end. Remember, best-execution rates are not available to all borrowers or from all financial institutions. Your FICO scores and other financial qualifications will be an important factor in your access to rates like these. | more...