Articles Published in: 2024

April 25, 2024

Need To Remodel Your Home?

What kind of FHA loan product is right for your home repair projects? Some people want to fund a remodeling or renovation project using a credit card, but what happens when you compare interest rates on your credit card to the rates you might be charged for an FHA refinance or an FHA 203(k) Rehab loan? Some people put these repair expenses on their credit cards because they are unable to build equity in their homes for a HELOC or a cash-out refinance. But for those who can refinance to pay for the work, the savings could be a major factor in their choices. Remodeling With An FHA Cash-Out Refinance The cash-out refinance option requires sufficient equity—20% or more, depending on the lender—to be approved. But the tradeoff is that | more...

April 24, 2024

Should You Buy A Home Now?

By Joe Wallace

U.S. News and World Report published an article in Spring 2024 with data from a U.S. News survey of American mortgage trends this year. The information from that report indicates that many potential real estate buyers may be delaying their commitments to see what happens with mortgage loan interest rates. In that survey, 67% of house hunters who responded say they are on a wait-and-see basis with respect to home loan interest rates. These house hunters hope to wait out the rates before buying a house this year. Also according to the survey, approximately one quarter of the respondents “want to see them below 5% before buying, which isn’t expected to happen in 2024 or even 2025. About half (49%) are willing to wait for more than six months for | more...

April 23, 2024

What You Need To Know About FHA Loan Closing Costs

By Bruce Reichstein

What must you know about FHA home loans, cash to close, and your obligations at closing time? If you are a first-time homebuyer, it’s easy to get confused (initially) about the difference between your down payment money, closing cost funds, and other expenses like the home inspection. Some of the early confusion comes from the fact that some do not understand the FHA philosophy about the down payment and the other expenses associated with closing day. That money is not lumped into your downpayment requirement when you pay closing costs. In other words, if you pay X amount of money at closing time for things like the FHA Up-Front Mortgage Insurance Premium and other expenses, that money is NOT considered part of your FHA loan downpayment. HUD 4000.1, the FHA | more...

April 22, 2024

Mortgage Rate Trends In The Second Quarter 2024

By Joe Wallace

At the time this article was written, 30-year fixed-rate FHA mortgage rates were listed in the low 7% range. Some expected that position to be far more prevalent in the past than it actually is as we review mortgage rates in the second quarter of the year. Is there a chance of recovery in the coming months? Conditions aren’t clear, but the Fed’s future actions could determine the direction of things. Recovery Prospects For The Housing Market May Be Tied To Future Fed Actions (Again) Matthew Graham of Mortgage News Daily reports, “While (Fed Chair) Powell and the Fed repeat that the rate path depends on economic data, it’s no surprise to see recent comments acknowledging a surprising amount of strength in the recent data.” Graham also says, “Stronger data | more...

April 18, 2024

Mortgage Borrowers At Risk In 2024?

By Joe Wallace

Are FHA mortgages and other types of mortgages riskier in 2024? The answer may be YES thanks to a currently elevated potential for mortgage fraud initiated by scam artists. Fraud prevention company Funding Shield reports high fraud vulnerability in roughly half of all “portfolio loans,” including residential mortgages, in the first three months of 2024. According to HousingWire.com, such problems seem to arise due to a “lack of appropriate controls” related to closing procedures. In some cases, these problems are not related to a residential real estate borrower or seller, but for one specific aspect of the mortgage process, FHA mortgage loan applicants may be at an elevated risk. Wire Fraud Scams And Your Mortgage The Funding Shield report includes data about closing cost-related wire fraud vulnerabilities. Those potential problems | more...

April 17, 2024

Questions To Answer Before You Start Househunting

By Joe Wallace

Making assumptions about the home loan process can hurt you. For example, some borrowers believe the FHA loan program is wrong for them because they aren’t financially disadvantaged. That assumption is not true. Others wrongly believe it is impossible to qualify for an FHA loan because they have less-than-perfect credit. This is sometimes true depending on the circumstances but if your FICO scores are above 500, this type of mortgage is worth considering. Additional lender standards may apply but the FHA loan program offers more forgiving credit requirements than some conventional equivalents. Any Residence Can Be Purchased With An FHA Mortgage? FHA single-family home loans are not permitted for investment properties. That said, it’s possible to use an FHA mortgage to buy a one-to-four-unit property but the borrower must live | more...

April 16, 2024

What Some Get Wrong About Home Loans

By Joe Wallace

There is plenty of bad information about home loans out there. Many persistent myths color a house hunter’s opinion of certain mortgage options including FHA loans. What kind of misinformation is there in this area? It includes the wrong notion that FHA loans have need-based guidelines, such as an income cap, or that they are only for first-time home buyers. Both of those are untrue. Did Fox Business News Get It Wrong About Mortgages? In April 2024, the Fox Business News article, Today’s 15- and 30-year mortgage rates rise ran some information about the home loan process including a section discussing rate locks. The article includes the following, quoted verbatim: “A mortgage rate lock lets you lock in the current mortgage rate for a certain amount of time — often | more...

April 15, 2024

FHA Loans and Home Inspections

By Bruce Reichstein

The difference between an FHA appraisal and a home inspection is a serious issue. Borrowers applying for an FHA mortgage to buy a home must have an FHA appraisal to ensure that the property meets minimum standards. But when a home passes the appraisal process or allows the loan to go through as long as required corrections are made, does that mean the property has been inspected and approved by the FHA? Not according to the FHA official site, which says an appraisal is never a guarantee or endorsement of any kind. Borrowers should know that the purpose of the appraisal is to establish the home’s fair market value and ensure that the home meets the minimum standards. However, the appraisal is not intended to discover any/all issues with a | more...

FHA Home Loans And First Time Home Buyers

April 10, 2024

Check Your Credit Before You Apply For An FHA Mortgage

By Joe Wallace

FHA home loans have forgiving credit qualifying requirements compared to some conventional mortgages. But even with more lenient qualification standards, FHA borrowers must still financially qualify for a mortgage. This is done (in part) using the borrower’s FICO scores and credit history information. What can a borrower do to raise FICO scores and improve credit reports before applying for a new home loan? Research Your Options If you haven’t worked on your credit for a while, research the industry before you begin. Credit agencies, including Equifax, Experian, and TransUnion, offer updated consumer credit tools, credit scores, and credit report monitoring services. Did you know you can sign up for electronic credit alerts, credit report monitoring, and other online services through credit reporting agencies? That’s not all. Experian is one credit | more...

April 9, 2024

Will FHA Loan Policies Change After The NAR Settlement?

By Joe Wallace

It was a legal move that stunned the mortgage industry. The National Association of Realtors (NAR) agreed “to pay $418 million over roughly four years to resolve all claims against the group by home sellers related to broker commissions,” according to a CBS News report. The settlement also affects how much in real estate commissions may be paid by the seller. The old 6% requirement has been eliminated. Federal agencies, including the FHA and HUD, are now working to assure customers and clients that the news won’t upend certain aspects of the FHA loan process. The Settlement Thanks to the proposed settlement, sellers may potentially pocket the savings they get by not having to pay the old traditional 6% MLS listing fee. Could those savings encourage some home sellers to | more...