August 21, 2018

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Articles Published in: July 2016

FHA Revises HECM Policy To Include Third Party Tax Verification Fee

FHA loan rules for Home Equity Conversion Mortgages (HECM) have been modified by the agency to include approval of third party fees for property tax verification. According to FHA Mortgagee Letter 2016-10, the third party fees will be added to the list of approved charges associated with FHA HECM loans, but the verification fees must meet FHA requirements. “A Third Party Property Tax Verification Fee is a fee charged to the mortgagee by a third party to verify the mortgagors property tax payment history and the annual amount of property taxes due for a specific property” states the FHA Mortgagee letter. “FHA is adding the Third Party Property Tax Verification Fee to the list of allowable charges and fees that may be paid by the mortgagor.” According to the mortgagee | more...

 

More About FHA Loans For Home With PACE Assessments

Recently we wrote a blog post about FHA plans to allow qualifying homes with PACE assessments to be purchased with FHA mortgages. The FHA announced this recently in order to help promote energy efficiency (PACE stands for Property Assessed Clean Energy and may be assessed in a manner similar to property taxes.) The FHA issued a mortgagee letter explaining how and why a property with a PACE assessment may be eligible for an FHA mortgage. Past issues with PACE include being considered a “first lien” on the property. FHA loan rules explain how new guidelines can permit a home with PACE to be purchased with an FHA mortgage: “Properties which will remain encumbered with a PACE obligation may be eligible for FHA-insured mortgage financing, provided that the mortgagee determines that | more...

 

Using a Co-Signer With an FHA Mortgage Loan

The video above gives some basic information about what a co-signer is, but there are some other details you should know about using a co-signer. FHA loan rules governing cosigners and related issues are found in HUD 4000.1 in a variety of places. One of the first things you’ll learn about co-signing an FHA mortgage is that the cosigner will need to verify identity using a Social Security Number. FHA loan rules differentiate between a co-borrower, who has shared ownership of the property purchased with the FHA mortgage, and the co-signer, who does not. In some cases, community property laws for legally married couples may affect how co-borrowing or co-signing is carried out. FHA loan rules in HUD 4000.1 state: “To be eligible, all occupying and non-occupying Borrowers and co-Borrowers | more...

 

FHA Loans For Properties With PACE Assessments

The FHA has announced it will insure mortgages on qualifying homes that have PACE assessments. According to a press release on the FHA/HUD official site, the move was initiated to help encourage the use of clean energy. “In order to enable homeowners seeking clean energy technologies in their homes to leverage a range of financing options, the Federal Housing Administration (FHA) today announced guidance that makes clear the circumstances under which it will insure mortgages on properties that include Property Assessed Clean Energy (PACE) assessments. FHA will now approve purchase and refinance mortgage applications in states that treat PACE obligations as special assessments similar to property taxes.” That’s according to the July 19, 2016 press release, which explains that the reason PACE assessments have been troublesome in the past is | more...

 
What Is A New Construction FHA Home Loan Compared To Existing Construction Loans?

FHA Loan Appraisal Rule Questions: A New Appraisal For A New Lender?

A reader asks, “I am selling a home that has a septic system that does not meet local requirements but has been grandfathered. The septic system has been inspected and is in good working condition. The appraiser said that because the age of the septic (greater than 30 years) that it would need to be replaced.” “We bit the bullet and decided to replace the septic but under new requirements we are going to also have to replace our water well to fit the new septic on our property. The combined cost of replacing both system will approximately $15k. Should I ask the buyers to try a different lender or is this going to be an issue with all lenders/appraisers?” FHA loan rules governing this issue can be found on | more...

 
Mortgage Loan Rate Trends

Mortgage Rate Trends: Unchanged To Slightly Higher

Mortgage loan interest rates were unchanged to slightly higher on Monday, though some borrowers will have noticed Monday’s changes in the form of slightly higher closing costs rather than an actual change in mortgage rates. We’re watching an overall upward trend in rates at the moment. World headlines continue to have potential to move rates, though the market hasn’t given much attention to certain issues such as the unrest in Turkey. 30-year fixed rate conventional mortgages were still at or near 3.375% best execution, depending on the lender and other factors. Some lenders are higher, some reflect the most recent moves in terms of adjusted closing costs (as mentioned above). FHA mortgage loan rates remain in their 3.25% best execution comfort zone. “Best execution” refers to the rates offered under | more...

 
When Is An FHA Loan Better Than A Conventional Loan?

FHA Loan Rules On Seller Contributions Part Two

In our last blog post, we answered a reader question about whether or not it’s permitted for the seller to contribute to the buyer’s closing costs and down payment. FHA loan rules do not permit anyone with a financial stake in the outcome to contribute towards a buyer’s down payment, but the rules DO permit the seller or other interested parties to contribute up to six percent of the sales price of the home. There’s a caveat to that listed in HUD 4000.1. Any contributions by the seller (or other interested parties) that exceeds the six percent limit is classified as an “inducement to purchase”. HUD 4000.1 explains what this means on page 221: “Inducements to Purchase refer to certain expenses paid by the seller and/or another Interested Party on | more...

 

FHA Loan Questions: Down Payment Assistance From The Seller?

A reader asks, “Can the buyer use seller assist for the down payment and closing costs? If yes, what is the limit?” This is a more common question than it may seem at first-sellers can and often do contribute toward the closing costs of an FHA loan, but the FHA loan rulebook definitely has some things to say about how much and what kinds of contributions a seller may make. FHA loan rules governing these contributions are found on page 220 of HUD 4000.1 and cover more than just the seller’s assistance. Any financial help toward the closing costs coming from what the FHA terms “interested parties” is governed by these rules. To begin with, no one with a financial stake in the outcome of the sale of the property | more...

 
Mortgage Loan Rate Trends

Mortgage Rate Trends: Rising

Mortgage loan rates have been on the rise most of the week; three out of four business days were marked by higher numbers or closing costs and with Brexit, overseas terrorism headlines, and domestic scheduled economic data releases, it’s possible we’re going to see rates creeping up over the short term next week much the way we did this week. At the time of this writing, 30-year fixed rate conventional mortgages are, best execution, reported at or near 3.375%, up this week from the previous week’s range bottoming out at 3.25%. FHA mortgage loan rates are currently holding in their 3.25% comfort zone. How long can they persist at or near these levels? Next week will be interesting to watch. (As always, best execution rates listed here assume ideal conditions; | more...

 
Who can qualify for an FHA loan?

FHA Loans and Bankruptcy

A Few Words About Bankruptcy from FHA.com on Vimeo. Some borrowers want to know how credit issues such as foreclosure, Chapter 7 bankruptcy, and Chapter 13 bankruptcy can affect their ability to get an FHA mortgage loan or refinance loan. While those who have been through such proceedings may have a better understanding of what happens to your credit, many who are facing the option of filing bankruptcy, going into loan default and foreclosure, or even doing a deed-in-lieu of foreclosure may not understand what’s at stake. The video above explains some basics about bankruptcy. But how does bankruptcy in particular affect your ability to get an FHA loan? Like foreclosure and deed-in-lieu, filing bankruptcy usually requires a mandatory “seasoning period” or waiting time between the bankruptcy and the new | more...