Articles Published in: August 2017

August 31, 2017

Do I Have To Make A Down Payment On An FHA Mortgage?

One variation of a commonly asked question about FHA home loans is, “Do I have to make a down payment on an FHA mortgage?” This question gets asked sometimes in reference to other government-backed loans that feature no down payment (available via a Department of Veterans Affairs program offered to qualifying military members and certain military spouses only). FHA home loans do require money down-the borrower’s minimum required investment is 3.5% of the adjusted value of the home. But there are situations where more money down may be required. Credit Score Issues Potential FHA borrowers who have credit scores outside the standard required scores (580 or higher for the FHA program minimums, though lender requirements may be higher) will be required to put more money down. This applies to borrowers | more...

August 31, 2017

Can I Get An FHA Home Loan If I Owe Back Taxes?

By Bruce Reichstein

Can I get an FHA home loan if I owe back taxes? The answer to this question depends on more than one factor, the most important being whether or not the borrower is delinquent on the taxes owed. In general, borrowers who come to the home loan process with delinquent accounts will find it difficult to get loan approval. Borrowers should expect to come to the FHA home loan process with a minimum of 12 months of on-time payments for all financial obligations. That said, disputed accounts and/or issues connected to identity theft may have different requirements (police reports, documentation of the issues, etc.) When it comes to taxes, FHA loan rules emphasize the requirement to be in a satisfactory payment arrangement with the creditor and a minimum period of | more...

The Credit Check For FHA Cash-Out Refinances

August 30, 2017

What Are My FHA Refinance Options?

By Joe Wallace

What are my FHA refinance options? That question, fortunately, has many answers depending on whether you need to refinance an existing FHA mortgage or refinance a non-FHA loan. The options include cash-out and no-cash out refinancing for both FHA and non-FHA loans, plus rehab mortgage options and more. Cash-Out and No Cash-Out FHA Refinance Loans FHA refinancing is possible with cash-out or no cash-out loans no matter what kind of mortgage you currently have-FHA, conventional, VA, or other non-FHA mortgage. Borrowers do not have to stay with the original lender for these refinance loan transactions. You are free to shop for a new participating FHA lender to refinance. Cash-out and no cash-out refinance loans will require a new credit check and appraisal. FHA Streamline Refinancing This type of FHA refinance | more...

August 30, 2017

FHA Loans And Natural Disasters: What You Should Know

By Bruce Reichstein

FHA home loans can be affected by natural disasters such as Hurricane Harvey. Whether you have experienced damage to your property due to high winds, flooding, or other issues, once that damage has been done you will need to deal with your mortgage lender, your insurance company, and other agencies. Some borrowers may need financial relief in the form of loan forbearance, foreclosure avoidance or other measures. The FHA loan handbook, HUD 4000.1, has a section heading titled “Loss Mitigation” which is all about foreclosure avoidance and options borrowers may have to save their homes. Those options include what happens after a natural disaster, starting with a 90-day moratorium on foreclosures based on circumstances outlined below: “FHA-insured Mortgages secured by Properties located in Presidentially-Declared Major Disaster Areas (PDMDA) will be | more...

Refinancing a Second Home With An FHA Mortgage Loan

August 29, 2017

What Happens To FHA Loans Not Endorsed Prior To A Natural Disaster?

By Joe Wallace

In our previous blog post, we examined FHA loan rules for properties that were in the process of being purchased (but had not closed the deal) before a natural disaster struck. What happens when an FHA home loan is not endorsed by the lender prior to the disaster? The answer may first depend on whether or not the location of the home is in a federal disaster area or not. The following information applies only to homes located in a federally declared major disaster area-according to HUD 4000.1, the FHA loan handbook: “All Properties with pending Mortgages or endorsements in Presidentially-Declared Major Disaster Areas (PDMDA) must have a damage inspection report that identifies and quantifies any dwelling damage. The damage inspection report must be completed by an FHA Roster Appraiser | more...

August 29, 2017

What Happens To My FHA Loan In A Natural Disaster?

By Bruce Reichstein

What happens to my FHA loan in a natural disaster? If you have already closed on your FHA mortgage, you’ll need to get in touch with your lender to determine what next steps are, but what about those who were in the process of purchasing property but did not close the loan before the disaster struck? FHA loan rules anticipate this problem and have specific instructions to the lender for handling what to do if a borrower’s purchase winds up in a federally declared disaster area. According to the FHA loan handbook, HUD 4000.1, “All Properties with pending Mortgages or endorsements in Presidentially-Declared Major Disaster Areas (PDMDA) must have a damage inspection report that identifies and quantifies any dwelling damage. The damage inspection report must be completed by an FHA | more...

FHA Announces Revisions To FHA Reverse Mortgage Policies

August 28, 2017

HUD Issues Announcement On HECM Loan Policy Changes

By Joe Wallace

The Department of Housing and Urban Development has issued a mortgagee letter detailing changes to the FHA loan HECM program (also known as FHA Reverse Mortgage program) effective for all case numbers assigned on or after September 19, 2017. According to Mortgagee Letter 2017-11, the changes affect how participating lenders proceed in cases where there has been a loan default for “unpaid property charges” and the sale of property secured by an FHA HECM that has been declared due and payable. According to the FHA/HUD official site, for cases where unpaid property charges cause a HECM loan to go into default, new guidance to lenders includes the following: “If a Borrower is unable or unwilling to repay the Mortgagee for any Mortgagee funds advanced to pay property charges, the Mortgagee | more...

August 28, 2017

White House Announces Federal Disaster Assistance For Texas

By Bruce Reichstein

On Friday, August 26, 2017, the White House announced federal aid for Texas to help affected counties in the state recover from Hurricane Harvey. According to Whitehouse.gov, the President “declared that a major disaster exists in the State of Texas and ordered Federal aid to supplement State and local recovery efforts in the areas affected by Hurricane Harvey beginning on August 23, 2017, and continuing.” A complete list of affected counties named as federal disaster areas is not available at the time of this writing, and conditions may be such that more counties are listed in the coming days or weeks. But for all affected areas, the FHA and HUD have disaster relief measures that can help home owners trying to recover from the effects of the hurricane including high | more...

August 25, 2017

What If My Home Was Damaged In A Natural Disaster?

By Joe Wallace

What if my home was damaged in a natural disaster? This is an important question. The answers, depending on circumstances, may affect FHA borrowers and non-FHA borrowers alike. The FHA and HUD official site discusses a variety of remedies for those who have experienced a natural disaster. Some of the most important advice? Contact your lender, your insurance agent, and FEMA as soon as possible after the disaster to make arrangements regarding FHA loan forbearance, foreclosure avoidance, and federal assistance. For borrowers with conventional mortgages, different options and requirements may apply. It is not safe to assume that any of the above is automatic-in most cases help must be applied for, especially where FEMA is concerned. Borrowers should also not allow themselves to be pressured into quick insurance settlements. You | more...

August 24, 2017

Do Section 8 Housing Vouchers Count For FHA Loans?

By Bruce Reichstein

There are many different types of income that can be used to qualify for an FHA home loan. While there is no minimum or maximum income requirement to qualify for an FHA mortgage, the borrower’s debt-to-income ratio, stability and duration of income, and other factors will be scrutinized as part of the loan application process. Some income is simple to verify. Other types of income have have additional requirements. That is true of certain public assistance including Section 8 Housing Choice vouchers and income received from government-run public assistance programs. In these cases the duration of the payments will be an important factor. Using Section 8 Housing Choice Vouchers As Income The FHA loan handbook, HUD 4000.1, states on page 210 that a lender is responsible for verifying the nature | more...