Articles Published in: October 2017

FHA Fixed-Rate Mortgages Versus Adjustable Rate Mortgages

October 12, 2017

Can I Get An FHA Mortgage After A Short Sale?

Can I get an FHA loan after a short sale? Many have asked this question, unsure of the FHA loan rules for transactions in the wake of a negative credit event such as a foreclosure, bankruptcy, or short sale. To begin, we should address the basic definition of a short sale and what that means for a potential FHA borrower. What Is A Short Sale? A short sale involves a transaction where a property is sold to avoid foreclosure, often at a loss. It is referred to professionally as a “pre-foreclosure sale”. FHA loan rules in HUD 4000.1 specifically define the short sale transaction as follows: “Pre-Foreclosure Sales, also known as Short Sales, refer to the sales of real estate that generate proceeds that are less than the amount owed | more...

October 11, 2017

Is There An FHA Loan For Homes On Tribal Land?

By Bruce Reichstein

Is there an FHA loan for homes on tribal land? According to the FHA loan handbook, HUD 4000.1, a type of loan known as a “Section 248 Mortgage” is available specifically for home purchases of this type. HUD 4000.1 defines the Section 248 mortgage as “a purchase or refinance Mortgage covering one- to four-family dwellings on Indian Lands.” Since definitions are extremely important for many aspects of the FHA loan program, this section of the FHA loan rules also defines what the FHA considers to be “Indian land” and the communities that live there: “Indian Land refers to those lands that are held by or for the benefit of Indian Tribes under some restriction or with some attribute peculiar to the legal status of its owners. Indian Tribe refers to | more...

October 11, 2017

How Can I Get Ready For An FHA Loan Application?

By Joe Wallace

How can I get ready for an FHA loan application? The process includes some advice you’ve likely heard before (check your credit, make sure you have on-time payments, and avoid new credit applications before you apply for a home loan) but there are other steps to take in the earliest stages of your house hunting journey that can be very helpful. Home Economics Do you know how much it will cost to live in and maintain your home? Utility bills for a house are likely to be higher than for a small apartment. It’s important to start learning what typical utility rates, commuting costs, and other expenses related to owning your home instead of renting. You’ll also want to investigate how much it may cost down the road to repair | more...

October 10, 2017

What Are The FHA Loan Rules For Maximum Loan Amounts?

By Bruce Reichstein

What are the FHA loan rules for maximum loan amounts? It’s an important question many borrowers need to know when looking for homes; knowing how much you can borrow is an important factor in budgeting and planning for your FHA loan. FHA Loan Maximum Mortgage Amounts Defined HUD 4000.1, the FHA loan handbook, describes FHA loan maximum mortgage amounts as follows: “A Mortgage that is to be insured by FHA cannot exceed the Nationwide Mortgage Limits, the nationwide area mortgage limit, or the maximum Loan-to-Value (LTV) ratio. The maximum LTV ratios vary depending upon the type of Borrower, type of transaction (purchase or refinance), program type, and stage of construction.” For most FHA loans, the maximum mortgage an applicant is eligible for involves “the lesser of the Nationwide Mortgage Limit | more...

October 10, 2017

Can I Buy A Mobile Home With An FHA Mortgage?

By Joe Wallace

Can I buy a mobile home with an FHA mortgage? That’s a question on the minds of many not looking for a typical suburban house or a condo unit. FHA loan rules in HUD 4000.1, the FHA loan handbook, address the question of mobile home and manufactured housing purchases with an FHA mortgage. FHA Loans Can Be Used To Purchase A Mobile Home Or A Manufactured Home HUD 4000.1 includes instructions for the lender on processing FHA mortgage loans for mobile homes and manufactured housing. There are restrictions on the age of the mobile home; it must have been built on or after June 15, 1976 in order to qualify for an FHA mortgage loan. Additional lender standards in this area may also apply. Mobile Home Requirements To Qualify For | more...

October 9, 2017

FHA Mortgage Rules For Homes In A Flood Zone

By Bruce Reichstein

In a previous blog post we discussed some of the FHA loan rules for purchasing homes that may be located in flood zones. According to the FHA loan handbook, homes in certain types of flood zones or Special Flood Hazard Areas are not eligible for FHA mortgages (including but not limited to SFHA Zone A, a Special Flood Zone Area, or Zone V). But other properties may be eligible. FHA loan rules for homes that are in a flood zone but are still eligible for an FHA mortgage vary depending on the type of property. Let’s examine the rules for each: Proposed or New Construction Homes HUD 4000.1 says of these properties: “If any portion of the dwelling, related Structures or equipment essential to the value of the Property and | more...

Who can apply for FHA Reverse Mortgages?

October 9, 2017

Can I Get An FHA Mortgage For A Home In A Flood Zone?

By Joe Wallace

Can I get an FHA loan for a home in a flood zone? With Hurricane Harvey, Hurricane Irma, and many other natural disasters, it’s logical that someone looking for a home anywhere near these disasters would wonder if their house hunt is going to be affected. FHA loan rules do address flood zones and FHA appraisal requirements for these areas; the answers can be found in HUD 4000.1. The FHA loan rules for this issue can be found under a section covering general property eligibility for an FHA mortgage. On page 143, we learn: “The Mortgagee must determine if a Property is located in a Special Flood Hazard Area (SFHA) as designated by the Federal Emergency Management Agency (FEMA).” “The Mortgagee must obtain flood zone determination services, independent of any | more...

October 6, 2017

Can I Refinance A Conventional Mortgage To An FHA Loan?

By Bruce Reichstein

Can I refinance a conventional mortgage to an FHA loan? It’s a very good question to ask, especially if you are interested in moving out of an adjustable rate mortgage into a fixed-rate loan. Do you know what your FHA home loan refinance options are? FHA Refinance Loans For Conventional To FHA It is possible to refinance a conventional mortgage to an FHA loan. According to the FHA loan handbook, HUD 4000.1, there are several options for FHA refinancing, including non-FHA to FHA transactions: “FHA insures several different types of refinance transactions: 1. Cash-out refinances are designed to pull equity out of the Property. 2. No cash-out refinances of FHA-insured and non FHA-insured Mortgages are designed to pay existing liens. These include: Rate and Term refinance, Simple Refinance, and Streamline | more...

October 5, 2017

HUD Secretary Ben Carson On Hurricane Harvey Disaster Relief

By Bruce Reichstein

The head of the Department of Housing and Urban Development has written an open letter to the victims of Hurricane Harvey discussing the FHA/HUD outreach to affected areas and options for disaster relief. According to the FHA/HUD official site, HUD Secretary Ben Carson addressed those in the federal disaster areas in Texas stating, “HUD is tasked with comprehensive, long-term disaster relief and has been working on the front lines in Texas. We are your ear on the ground and your voice in Washington, and we are committed to providing a compassionate and effective response.” Secretary Carson’s remarks included options for those recovering from Hurricane Harvey. “We are currently locating vacancies and moving displaced residents into safer housing.” “We are also working closely with homeless shelters and with temporary shelters, ensuring | more...

FHA Mortgage Loans: Do Interest Rates Matter?

October 4, 2017

Do I Have To Pay Off Collection Accounts To Qualify For An FHA Home Loan?

By Joe Wallace

Do I have to pay off collection accounts to qualify for an FHA home loan? That’s a question on the mind of anyone who has a collection agency action in their credit history. What does the FHA have to say about this issue? On the FHA official site, there is a Frequently Asked Questions section that directly addresses this potential problem for loan applicants nervous about issues in their credit report. It begins with a definition of the phrase “collection account”: “A Collection Account refers to a Borrower’s loan or debt that has been submitted to a collection agency by a creditor.” FHA loan rules address collection accounts in the amount of $2000 or more: “If the credit reports used in the analysis show cumulative outstanding collection account balances of | more...