Articles by: Bruce Reichstein

January 18, 2021

Celebrating Martin Luther King, Jr. Day

Happy Martin Luther King, Jr. Day 2021! Banks and markets are closed today to observe the holiday and we too feel it’s very important to remember this important day. America owes a great deal to Dr. Martin Luther King, Jr. and we are proud to observe this day dedicated to him and his accomplishments. Today, we pause our regular coverage of FHA news and FHA loan topics to observe the holiday. We resume our usual schedule of posts tomorrow. Thanks for reading!

FHA Construction Loan Rule Changes In 2021

January 15, 2021

FHA And HUD Update Construction Loan Rules

By Bruce Reichstein

If you are in the market for a home but would prefer to have a house built to your specifications instead of buying another person’s dream home, the One-Time Close mortgage can help you build instead of buy. This type of loan has an FHA equivalent with low down payment requirements (3.5% in typical cases) and there’s also a VA home loan option for those with qualifying military service. The FHA and HUD recently updated its rulebook for FHA Construction loans; there are revised definitions of properties that qualify for construction loans as well as new inspection rules. Back in 2020, the FHA and HUD announced some pending changes to the FHA Single-Family Home Loan Lender’s Handbook, HUD 4000.1 due to policy alterations in 2018 and 2019. Those alterations required | more...

January 12, 2021

What Affects My FHA Loan Approval? Debt Ratio Issues

By Bruce Reichstein

Every mortgage or finance blog includes a lot of writing and advice about the need to monitor your credit reports. And make no mistake, this is important advice that is good to follow, but if you are in the market for a new home in 2021 the amount of monthly debt you have compared to your monthly income will be just as important for loan approval. Why Your Debt Matters Some applications crunch the numbers and believe they can afford the loan on paper. But what happens when that does not match what the lender gets when she runs your debt ratio numbers? People who technically qualify on paper but not in reality are bad risks for the lender and their jobs depend on screening out those bad risks. And | more...

Don't Make These Mistakes With Your One-Time Close Construction Loan

January 8, 2021

Monitoring Your Credit Ahead Of Your Rehab Loan Or One-Time Close Loan

By Bruce Reichstein

Credit monitoring is important for any consumer but borrowers interested in building a home on their own lot using a One-Time Close (OTC) construction loan or even an FHA 203(k) Rehab loan should give serious thought about investing in credit monitoring as early as possible in the planning stages. This can be a big advantage for those seeking rehab or construction loans; participating FHA lenders may require higher FICO scores for construction loans and you’ll want every advantage in that department including knowing the contents of your credit report and the changes to it as they happen. FHA Rehab Loans allow borrowers to buy fixer-upper loans and have work done to bring them up to code and FHA standards; FHA One-Time Close (OTC) mortgage loans allow borrowers to build a | more...

December 30, 2020

Five Facts You Need To Know About FHA Loans In 2021

By Bruce Reichstein

Are you interested in buying or building a home in the new year? Be informed about several issues that may apply to you when building or buying a new home. With a little information you can become better prepared to explore your FHA home loan options in 2021 5. FHA Loan Limits Are Higher in 2021 FHA loan limits go up again for the majority of housing markets in the USA again in 2021; higher loan limits may make the difference for some trying to decide where to purchase or build as well as for what kind of property to buy. Don’t forget that FHA loan limits are higher for multi-unit properties. Those interested in building a home using an FHA One-Time Close construction mortgage should ask their lenders how | more...

Low Mortgage Rates and Refinance Options

December 23, 2020

Changes To FHA Home Loan Paperwork In 2021

By Bruce Reichstein

Are you looking for a house to buy in the new year? If you are new to house hunting and the home loan process in general, you won’t notice the changes coming to FHA loan paperwork in 2021, but you’ll definitely be affected by the changes. The FHA and HUD issued a press release in late 2020 announcing the publication of a revised Form HUD-92900-A, (92900-A) HUD Addendum to Uniform Residential Loan Application (URLA). The revisions change certain consent forms, remove a requirement for new construction, and modify other aspects of the home loan process for FHA mortgages. The modifications are applied to documents considered typical for the FHA home loan process. Why are they changing? The move is part of a process dictated by something the FHA and HUD | more...

Who should apply for a construction loan?

December 21, 2020

Build Your Dream Home With A One-Time Close Loan

By Bruce Reichstein

Do you own land you want to build a home on with a low down payment? Do you want to build a house from the ground up and purchase the land at the same time? There is a construction loan that can allow you to do both–the One-Time Close construction mortgage. These loans, also known as OTC mortgages or single-close mortgages, are offered as FHA mortgages (with a low 3.5% down payment requirement for any financially qualified borrower), USDA loans (need-based mortgages with income caps and other requirements) and VA construction loans with no down payment required in most cases. Some potential homeowners may be hesitant to commit to a construction loan–the process is unfamiliar to them, and to some it just seems a bit overwhelming. But getting started is | more...

December 17, 2020

FHA Condo Loan Basics You Should Know

By Bruce Reichstein

Some borrowers are surprised that you can choose an FHA condo loan; some view condo units as more of a luxury-type housing option or somehow otherwise out of their price range. But FHA home loans include a condo loan option and the FHA official site explains how it works; “Section 203 (b) of the National Housing Act provides authority to insure any mortgage covering a one-family unit in a project coupled with an undivided interest in the common areas and facilities which serve the project.” FHA home loans can be approved for condo units for up to 30-year terms (purchase or refinance) for units in an FHA-approved condominium project OR, as FHA.gov describes, “in a project that is not FHA-approved but meets the Single-Unit Approval requirements”. How does a condo | more...

Home Loans For Building On Your Own Land

December 15, 2020

What Is A Home Construction Loan?

By Bruce Reichstein

Construction loans have different names–you may read them referred to as home construction mortgages, and depending on the terms and conditions of the loan you may find them referred to as One-Time Close mortgages or Construction-To-Permanent mortgages. If you want to build a home on your own land or on land you buy in conjunction with your construction loan, you should ask your loan officer about the FHA and/or VA One-Time Close construction loan programs. These loans feature a single mortgage for the construction phase and the mortgage portion of the transaction–unlike other construction loans that require two loans, two applications, two closing dates, etc. Myths about the construction loan process include who can buy–even a first-time home buyer can be approved for a One-Time close mortgage if they qualify | more...

One Time Close Mortgage Loans: The Base Home Sales Price

December 11, 2020

One-Time Close Mortgage Loans: Which Is Right For You?

By Bruce Reichstein

A One-Time Construction loan provides a single loan for building a home from the ground up. You don’t have a construction phase loan and a mortgage loan to apply for separately when you use a One-Time Close mortgage. There are VA One-Time Close construction loans, FHA One-Time Close mortgages, and USDA versions of the same loan. Which one is right for you? USDA construction loans are need-based loans; household income limits and other requirements apply. Some borrowers will need a USDA loan while others may not qualify because the earn too much per household or because of other applicable factors. VA mortgages in general are a huge advantage–and the VA One-Time Close mortgage is no exception–because eligible and qualified borrowers are able to apply for this loan with no down | more...