Articles Published in: December 2016

December 13, 2016

Mortgage Loan Interest Rate Trends: Higher

Mortgage loan interest rates have been in an upward trend for some time now; since our last report we saw rates hit two-year highs once more on Friday only to recover a little come Monday. In days past we’ve seen overseas issues such as the European Central Bank’s policy announcements play a partial role in the investor reactions that caused some of the upward pressure on rates, but also bond market issues and jitters over economic issues related to politics. These factors, combined with the potential for the Fed to announce an interest rate hike, and it is no surprise that we’re in an upward trend at the moment. 30-year fixed rate conventional mortgages are reported, at the time of this writing, in a range between 4.125% and 4.25% (best | more...

December 12, 2016

Appraisal Issues: Wood Floors

By Joe Wallace

FHA appraisal topics have been very popular recently in our comments section. One reader asks, “I’m going to view a home that has a plywood floor in the basement. not sure if that will be acceptable by FHA guidelines. Is there somewhere I can access a list of what is unacceptable?” FHA appraisal requirements for forward and “reverse” mortgages (HECM loans) are found in HUD 4000.1, starting on Page 465. This handbook can be downloaded from the FHA official site at www.fha.gov. A quick scan of HUD 4000.1 doesn’t reveal a specific requirement for the nature or construction of wood flooring in basement areas, but that leads us to a very important point where issues like these are concerned. FHA appraisal rules are NOT the only guidelines that must be | more...

December 12, 2016

FHA Loan Appraisal Issues: Water and Septic

By Joe Wallace

A reader asks, “Im selling a house with a septic tank. The home was renovated and an addition was added, and the septic tank was opened, inspected, drainedor whatever they do to septic tanks. Since there was an addition, we had to get an inspection. A year ago the county ran sewers in the subdivision and now theres a place to connect mine if I decide to do so. But the water bills my neighbors who connected to the sewer get now are close to triple what mine are! Would FHA really make a loan contingent upon” (hooking up to the local utility)? There is no simple answer to questions like these because FHA requirements aren’t the only ones that need to be met; state and local ordinances, building codes, | more...

December 9, 2016

FHA Loans And Building Code Requirements

By Joe Wallace

FHA loan rules include minimum standards for the property to be purchased with an FHA mortgage, but state and local building code also has a say in whether a home is suitable. With that in mind, we examine a recent reader question in the comments section: “I am looking for a townhome with a FHA loan. One complex I have looked at years ago, it is a two bedroom with a loft, next to the loft was a very large storage room, no windows. The seller has turned this room into another bedroom? Electric and all. Should I even bother, for my state can not consider a bedroom a room with no windows? She can remove bed and make it a den? if was a conventional loan would not be | more...

FHA One-Time Close Construction Loans In 2019

December 8, 2016

FHA Loan Assumption Processing Fees

By Joe Wallace

One of the benefits of FHA home loans is the ability to let another person assume the loan, with the participation of the lender. Most FHA loans today may be assumed by another person as long as the lender is involved in the process. Loan assumptions do have closing costs, including a processing fee. The FHA official site has announced changes in the processing fee structure for FHA loan assumptions. According to FHA Mortgagee Letter 2016-24, the agency’s maximum fee of $500 for processing an assumption where a credit check is required hasn’t been modified, “since it was established in the now superseded Handbook 4330.1 REV-5, Section 4-4A.2, dated September 29, 1994. As mortgagee expenses have risen since the maximum processing fee was established, it is appropriate to establish a | more...

December 8, 2016

Mortgage Rate Trends: Lower

By Joe Wallace

Mortgage rate numbers have fallen a bit since our last report. The current upward trend has seen some corrections, but Wednesday’s lower rates are inspired by overseas economic developments. Specifically, the European Central Bank(ECB) is set to make an important announcement about tapering-an issue that was a major spoiler in mortgage loan interest rates at home in years past. The ECB announcement has no direct connection to the daily FHA or conventional mortgage rate, but investor behavior often does, and that’s what happened on Wednesday. Investors are placing their money where they anticipate it will do the most good depending on whether the investor believes tapering will happen soon or not. The details of those investment strategies are unimportant for our purposes here; suffice it to say that investor behavior | more...

December 7, 2016

FHA Loan Credit Issues: A Reader Question

By Joe Wallace

Credit issues-an important area to consider when planning for a new FHA mortgage. One reader asks, “I am in the process of settling with a credit card lender from an account that went bad several years ago. Basically I fell on hard times and stop paying it. I owe about 10k.” “However I with my lawyer they have agreed to accept 3400. My understanding is this will reflect on my credit is that this will report on my credit report as settled for less than full balance. How will this affect my chances of buying a home with an FHA loan? Note this credit card is from about 6 years ago. I have many other credit cards probably 7 or 8 that I have applied for since this default and | more...

December 7, 2016

FHA Loans and Credit Report Issues

By Joe Wallace

A reader asks us a question about FHA loans and credit issues this week: “I have applied for a mortgage and I have a judgement on my credit that is part of a class action law suit. Does this judgement affect my chances for getting a mortgage with FHA. Or do I need to pay off this judgement. Is there any exceptions to this situation?” FHA loans are governed by the rules in HUD 4000.1, which include instructions to the lender specifically about judgments. What does the FHA view as a “judgment”? Here’s the definition from the rule book: “Judgment refers to any debt or monetary liability of the Borrower, and the Borrowers spouse in a community property state unless excluded by state law, created by a court, or other | more...

How much can I borrow with an FHA refinance loan?

December 6, 2016

FHA Loan Limits Rise in 2017: How Much?

By Joe Wallace

In a recent blog post, we discussed the news of FHA loan limits increasing in 2017. Every year the FHA/HUD official site releases the data on FHA loan guaranty limits for the new year. These limits can be affected by legislation, housing market conditions, and other factors so an annual update (at the very least) is required to establish limits for the new year. How much with FHA loan limits increase in 2017? The FHA issued a mortgagee letter (2016-2017) that announces both the new limits for low-cost areas and high cost areas alike. According to the FHA official site, the low-cost area FHA mortgage loan guaranty limits for 2017 are set as follows as described in the mortgagee letter: “The FHA national low cost area mortgage limits, which are | more...

December 6, 2016

FHA Appraisals: A Reader Question

By Joe Wallace

“I am getting ready to purchase a home. It has been under contract for 6 weeks. 1.5 weeks out, ‘…there is concern that there may be moisture. Please have a specialist determine if there is no moisture or mold present’. My contractor that will do renovations says there is no mold present; however, ‘his word does not count because he is not a mold specialist’. Now I am 3 days from closing and a mold remediation person is $900 and a week turnaround time. What are my options?” FHA appraisals are an important part of the home buying process, and where corrections are required by the FHA appraiser, those corrections are usually ordered as a condition of loan approval. The reader question doesn’t specify if this was a correction or | more...