Articles Published in: January 2017

January 12, 2017

FHA Loan Rules For Part-Time Income

FHA loan rules require the lender to verify both employment and income. The lender must determine that a borrower’s income is both stable, and likely to continue for the purpose of making the mortgage loan payment. But what kinds of employment can a lender use to qualify the borrower? A reader got in touch with us recently to ask, “What if I have a 20 year old borrower that graduated HS in 2014. She has 2 jobs (receptionist at both). One shes had for 2 years 9 months and only works 15 hours a week and the second shes had for 1 year 4 months and puts in 20 hours a week. Will FHA accept both incomes as qualifying income?” FHA loan rules covering this issue are found in HUD | more...

January 12, 2017

Mortgage Rate Trends: Improving

By Joe Wallace

Before the new year, but after the 2016 election, mortgage rate trends were in what seemed to be an upward trajectory due to a variety of factors including uncertainty among investors regarding the new administration. But since the new year, we’ve seen more recovery, including the days following our last report. On Thursday, mortgage rates continued improving in small increments, with affected borrowers often getting the benefit in closing costs rather than an actual change in the mortgage rate. At the time of this writing, 30-year fixed rate conventional mortgages were at a best-execution 4.125%. That’s not a change from our previous report, but according to our sources more lenders are offering this best-execution rate now than since our last post. 4.125% could be at or near what some market | more...

January 11, 2017

FHA MIP Rates For 2017: Revised

By Joe Wallace

The FHA/HUD official site has announced changes to the FHA MIP fee structure for 2017. According to the latest FHA mortgagee letter, “FHA continuously strives to achieve the appropriate balance between meeting the housing needs of the borrowers that FHA’s mortgage insurance programs were created to serve, and also the requirement of minimizing the level of risk to the Mutual Mortgage Insurance Fund undertaken relative to the insurance of those mortgages.” “FHA has determined that the appropriate balance of its statutory operational goals now requires a reduction of the rate of annual MIP charged pursuant to Section 203(c)(2)(B) of the National Housing Act (NHA). As provided in this ML, the total annual MIP charged pursuant to NHA sections 203(c)(2)(B) and (C) for most Title II Single Family forward mortgages has | more...

January 11, 2017

Income Documentation: A Reader Question

By Joe Wallace

A reader got in touch with us this week to ask a question about the FHA requirements for income documentation: “I work on a commission basis where a large part of my income does not appear on my w2. Say I make 4,000.00 in commission my expense to do my job is 1,000.00 my employer will write a check to me for that amount and them deducts it from my 4000.00 commission and then I am taxed on the remaining 3,000.00.” “I am at the end of the loan process and the underwriter is requesting a letter of explanation from the employer and she will not respond. Does she have to legally comply and how long can she take?” Unfortunately this falls dangerously close to asking for legal advice, and | more...

January 10, 2017

FHA Appraisal Update: A Reader Question

By Joe Wallace

What’s the difference between an FHA appraisal update and ordering a second appraisal? That’s an important point when it comes to answering the reader question that came in via our comments section this week: “My question is this: Can a lender order a new appraisal on a property that has already been assigned an FHA case number (previous buyer offer fell thru)? Appraisal is less than 120 days old. Since the initial appraisal the seller has installed a new roof, WDO repairs and other minor repairs. Would this give the new lender a reason to order a new appraisal?” FHA loan rules in HUD 4000.1 make a distinction between an FHA appraisal update and a “second appraisal”. HUD 4000.1 says the following about a second lender ordering a new appraisal | more...

January 10, 2017

Mortgage Rate Trends: Moving Lower

By Joe Wallace

Though the borrowers affected by Monday’s move lower may find the resulting improvements reflected in closing costs rather than in actual mortgage rate changes (depending on the lender), the start of the week did find rates moving low enough to erase the upward movement from the end of last week. Market watchers have stated that we’re entering a phase where there are hopes of an overall downward trend, but it’s too early to call it as such. What we seem to have at the moment is a pushback against the higher movement that began post-election, but whether that’s a short-term bump in the road or not can’t be determined…yet. On Monday, 30-year fixed rate conventional mortgages moved more decisively into a best-execution 4.125%, which basically means that more lenders are | more...

January 9, 2017

Collection Accounts and FHA Loans

By Joe Wallace

We’ve had some recent questions about home loans and collection accounts lately; in light of those questions it seemed like a good time to review the FHA loan rules on collection accounts as found in HUD 4000.1. The FHA loan rule book has instructions for the lender on what to do when reviewing such credit report data and it never hurts to know what your loan officer’s marching orders are in this area-at least where FHA minimum standards are concerned. The information below may be supplemented or affected by lender standards, so know that you’ll need to see what’s possible with a specific lender if any of the rules quoted here apply to your circumstances. Lender standards will definitely apply in addition to what’s found in HUD 4000.1. Let’s begin | more...

January 9, 2017

Mortgage Rate Trends: Lower Overall

By Joe Wallace

Since our last report we’ve seen a mortgage rate recovery of sorts, but it is still too early to label it on overall short-term downward trend. Last week rates moved lower in short-term ways that give some market watchers reason to use the term “correction” in their reports, but Friday’s Employment Situation Report did cause a bit of an upward turn for mortgage loan interest rates. The key to Friday’s move is that the changes weren’t terribly surprising to those paying close attention, and even with a modest readjustment, we’re still looking at numbers we haven’t really since since the election, as you’ll see below. 30-year fixed rate conventional mortgages moved as low as a best-execution 4.125%, but 4.25% is also available from some lenders, so we have a best | more...

January 6, 2017

Down Payment: FHA Loan Rules

By Joe Wallace

How much do you know about FHA loan down payment requirements? If you’re feeling in the dark about this as a new house hunter, don’t feel bad-we take plenty of reader questions in the comments section about FHA home loans, but from time to time we get them not just from home buyers or sellers, but also from loan officers and others in the industry. There was a reader question this week from an “industry person” about down payments and the FHA loan rules associated with them. We like to point out in times like these that we are not affiliated with the FHA, HUD, or any other government entity, but we do where and know how to find the answers to questions like the following: “What about two brothersone | more...

January 5, 2017

Fair Housing Complaints: A Reader Question

By Joe Wallace

The Fair Housing Act is a federal law designed to prevent discrimination in all phases of the housing process, whether buying or renting. A reader got in touch with us recently in the comments section to complain about a fair housing issue. “My Mom lives in low income housing and has been discriminated against due to her disability, HPHA not wanting to accommodate her by installing her AC or allowing her to install it herself due to her asthma and breathing problems doctor orders/note saying that she needs this to help with her disabilityshe is being wrongfully evicted, now homeless and is a victim of discrimination and violence against women act Due to HPHA and their property manager…” While there’s no specific question mentioned in this comment aside from, “can | more...