Articles Published in: August 2017

August 23, 2017

Can I Get An FHA Home Loan After Foreclosure?

Can I get an FHA loan after foreclosure? This is a question that comes up quite often. The answer depends on a variety of factors including the date that the foreclosed property was transferred out of the borrower’s name. The FHA loan handbook, HUD 4000.1, states that the FHA minimum requirements for getting a new loan following a foreclosure include a waiting period. This period, often called a “seasoning period” or “seasoning requirement” is normally three years. From HUD 4000.1: “A Borrower is generally not eligible for a new FHA-insured Mortgage if the Borrower had a foreclosure or a Deed-In-Lieu of foreclosure in the three-year period prior to the date of case number assignment.” The next line in that section is a crucial one: “This three-year period begins on the | more...

August 23, 2017

Can I Get An FHA Loan After Bankruptcy?

By Joe Wallace

Can I get an FHA loan after bankruptcy? That question is a common one, and the answer depends as much on the borrower as it does on the rules of the FHA single family loan program. In general, those who experience bankruptcy will be required to wait out a “seasoning period” described in HUD 4000.1 (the FHA loan handbook). Depending on what type of bankruptcy you filed, borrowers may also be required to get court permission before attempting to proceed with a new home loan. Mandatory FHA Loan Seasoning Periods Following Bankruptcy Bankruptcy rules may vary depending on the type, but in general a borrower’s minimum waiting period will be 12 months from the time the bankruptcy is discharged. The waiting period does NOT begin from the filing date. FHA | more...

August 22, 2017

Who Can Apply For An FHA Mortgage?

By Bruce Reichstein

Who can apply for an FHA mortgage? The answers to this question-and yes, there are several parts-may surprise you. One aspect of the answer involves whether or not the applicant is of legal age, and another has to do with credit scores. Who is eligible to apply for an FHA mortgage? FHA Loans Are For Legal Adults According to HUD 4000.1, the FHA loan handbook, “The Borrower must be old enough to enter into a mortgage Note that can be legally enforced in the state, or other jurisdiction, where the Property is located (‘State Law’). There is no maximum age limit for a Borrower”. FHA Loans Are For Those With Social Security Numbers HUD 4000.1 requires all applicants to provide Social Security Numbers to the lender. However, there is no | more...

August 22, 2017

HUD Announces Disaster Relief For West Virginia

By Joe Wallace

The Department of Housing and Urban Development (HUD) has announced disaster relief for storm victims in West Virginia, thanks to a federal disaster area declaration for Harrison, Marion, Marshall, and Wetzel counties. According to a press release on the FHA/HUD official site, the agency will “speed federal disaster assistance to the State of West Virginia and provide support to homeowners and low-income renters forced from their homes due to severe storms, flooding, landslides, and mudslides” in zones now declared federal disaster areas. The FHA/HUD disaster relief measures include a 90-day moratorium requested by HUD on all FHA loans in the affected areas, and also the availability of FHA 203(h) rehab loans intended for “disaster victims who have lost their homes and are facing the daunting task of rebuilding or buying | more...

Should I Consider An FHA Reverse Mortgage?

August 21, 2017

Does The FHA Appraiser Work For The Lender?

By Bruce Reichstein

Does the FHA appraiser work for the lender? That’s what one reader wanted to know this week, writing us to ask: “I read your article about how an FHA appraiser is chosen by a lender but my question is: Is the FHA appraiser an ‘agent’ of the lending company? The reason I ask is two years ago I purchased my first home with an FHA loan. Two weeks after closing my roof leaked. It turns out our house has five layers of roofing on it which is visible to the naked eye from the ground because we have no gutters on the home.” “When I called the FHA resource line I was finally told that the appraiser and his report falls back on the lending company…So now I am wondering | more...

August 21, 2017

Are FHA Appraisals The Same As Home Inspections?

By Joe Wallace

Are FHA appraisals the same thing as home inspections? We’ve fielded a few reader questions this week about this issue, and it is very important for borrowers to fully understand why they should budget and save for the optional home inspection in addition to an FHA appraisal (which is not optional). FHA appraisals are NOT the same as home inspections. Appraisers and home inspectors will approach the same property with different intentions and procedures. The FHA appraisal will never give a borrower an informed look at the home the way the home inspection is designed to; the shortest way to address this issue is to state that appraisals are for lenders, home inspections are for borrowers. Even if a property makes it all the way through the appraisal process with | more...

August 18, 2017

Can My Seller Pay Some Of My Closing Costs?

By Bruce Reichstein

Can my seller pay some of my closing costs? The basic answer is, “yes, within certain limits.” FHA loan rules permit certain expenses to be negotiated between buyer and seller, including the contribution of allowed costs. How does it work? FHA Loan Rules For Interested Party Contributions HUD 4000.1, the FHA loan handbook, defines “interested parties” as “sellers, real estate agents, builders, developers or other parties with an interest in the transaction”. HUD 4000.1 states that such interested parties are permitted to offer payments on “origination fees, other closing costs and discount points” within the bounds of FHA loan rules (more on that below), state law, and lender standards. What Payments Can An Interested Party Contribute? HUD 4000.1, page 232, states that an interested party or parties may contribute towards | more...

FHA Loan Rules: Using Rental Income to Qualify for a Mortgage Loan

August 17, 2017

What Kind Of Home Can I Buy With An FHA Mortgage?

By Joe Wallace

What kind of home can you buy with an FHA mortgage? The answer isn’t what some people expect, likely due to a misunderstanding of the FHA loan program, who it is intended for, and why it exists. A good example of this? The assumption that FHA mortgages are primarily for first-time home buyers or the economically disadvantaged. Such assumptions are not true. FHA loans are for any financially qualified applicant, which means you don’t have an income threshold to meet, there are no restrictions on those who have purchased homes before, and there is no income maximum. What kind of home can you purchase with an FHA mortgage? FHA loans permit the purchase of homes which are primarily residential, have no restrictions of resale, and which meet FHA minimum standards | more...

August 17, 2017

What Kind Of FHA Loans Are Available?

By Bruce Reichstein

What kind of FHA loans are available? This is an important question because it’s good to know what is not possible with an FHA mortgage as well as the options available to you. For example, some ask if an FHA loan can be used like a personal loan-is it possible to buy a home with an FHA mortgage but apply for more money than you need to complete the transaction? The answer in this case would be no, because FHA loan rules do not permit cash back to the borrower in that way at closing time, refunds excepted. So what can you do with an FHA mortgage loan? FHA Loans For Single Family Residences FHA home loans are intended for owner-occupiers. That means if you buy a property with an | more...

August 16, 2017

What Does My FHA Lender Look For In My Credit Report?

By Joe Wallace

What does my FHA lender look for in my credit report? That is a very good question to ask, and the earlier in the home loan planning stages you ask, the better off you’ll be. It’s highly recommended that home loan borrowers get copies of their credit reports in the year leading up to a home loan application. You want to know what your credit history says about you before you submit that information to your loan officer. FHA Loan Rules For Credit Reports Your lender is required by the FHA loan program to pull your credit reports, and to use “traditional” credit reporting wherever available. Some borrowers do not have credit, or have non-traditional credit histories. According to the FHA loan handbook, HUD 4000.1, the lender is required to | more...