May 22, 2019

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Articles by: Bruce Reichstein

Bruce Reichstein - Staff Writer

By Bruce Reichstein

May 21, 2019

Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.

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Questions A First-Time Home Buyer Should Ask The Seller

Questions A First-Time Home Buyer Should Ask The Seller

First-time home buyers and those who have purchased a home before but haven’t had to explore housing markets in a while should make a list of questions to ask the seller of a home placed on the real estate market. Sometimes it’s not the answer to the questions as much as the way the seller answers those questions-your ability to ask important questions in those cases is important, but so is paying attention to how the questions get answered. For example, the question, “Has the roof ever been replaced or repaired?” may get you a direct answer; “No, nothing has ever gone wrong with the roof”. But if the seller hesitates or offers a less-than-forthcoming answer, such as, “I don’t remember anything going wrong with the roof” or “No, the | more...

 
FHA Loan Credit Advice

FHA Loan Credit Advice

First-time home buyers and experienced home owners alike sometimes need help understanding what it takes to be approved for a major line of credit like an FHA home loan. What does it take to financially qualify for the mortgage and get on the road to home ownership? Buying real estate with an FHA mortgage means making a serious investment of time and money. And that usually begins with budgeting, saving, and working on your credit. Preparing your credit a year in advance or more is a very good way to prepare for the home loan application process. Why? Your lender needs to see at least 12 months of on-time payments on ALL financial responsibilities prior to your applying for the home loan. Anything less than this can hurt your chances | more...

 
Refinancing a Second Home With An FHA Mortgage Loan

Refinancing a Second Home With An FHA Mortgage Loan

Not all borrowers are first-time home buyers; some who seek to buy a home with an FHA mortgage loan already own property and seek to own again. FHA home loan rules do not single out first-time home buyers, though the program is ideal for anyone who needs a lower down payment and more forgiving credit requirements. Those who have purchased a second home, whether or not they were using an FHA mortgage for that purchase, will likely want to consider refinancing at some point. This makes sense as most homeowners will consider a refi loan for one reason or another. How does the owner of a second home get an FHA refinance loan? Much depends on the type of loan you need; cash-out refinancing, a refinance loan to improve the | more...

 
FHA Loans For First-Time Borrowers

FHA Loans For First-Time Borrowers: Debt Ratios

One area that is just as important as FICO scores and credit reports to first-time borrowers? The amount of debt versus the amount of monthly income. This is known as a debt-to-income ratio or debt ratio for short; this is just as crucial for a borrower as their FICO scores. Many borrowers already know this; they have spoken to a lender or a housing counselor, or they have done their research already and fully understand that if you have too much outgoing debt and not enough monthly income, your home loan chances are in jeopardy. But what is not as well-known? The fact that there are actually TWO debt ratios the lender will look at. Yes, there are two calculations and if you don’t anticipate the second one you may | more...

 
FHA Loan Appraisal Issues: Environmental Concerns

FHA Loan Appraisal Issues: Environmental Concerns

The FHA appraisal requires attention to a variety of areas in and around the home, but one aspect of the appraisal has to do with assessing safety hazards and environmental issues that could interfere with the borrower’s ability to use the home. In the case of these FHA appraisal rules, the term “environmental” refers specifically to the areas in and around the home. HUD 4000.1, the FHA loan handbook, begins addressing these concerns by instructing the lender: “The Appraiser must report known environmental and safety hazards and adverse conditions that may affect the health and safety of the occupants, the Property’s ability to serve as collateral, and the structural soundness of the improvements”. Such hazards can include lead-based paint, mold, chemicals, and other hazards. One recent addition to the HUD | more...

 
FHA Appraisals Versus Home Inspections: Facts You Should Know

FHA Appraisals Versus Home Inspections: Facts You Should Know

We write about FHA home loans, the FHA appraisal process, and why the appraisal should never be used in place of a home inspection to determine the condition of the home. Borrowers who do not personally arrange for a home inspection and rely on the results of the FHA appraisal alone put themselves at serious risk of buying a home that has hidden problems. Because lenders and other industry professionals sometimes use the term “inspection” when referring to the appraisal, borrowers may assume that the appraisal really IS an inspection (which is more in-depth than an appraisal). But this is not true. Here’s one example why you should not rely on the FHA appraisal to tell you the condition of the home; HUD 4000.1 includes appraisal requirements. Here’s a passage | more...

 
FHA Home Loan Income Limits Do Not Exist

FHA Home Loan Income Limits Do Not Exist

Some borrowers confuse the features of the FHA home loan program with other government-backed loans, but when it comes to the question of income limits, FHA borrowers do not need to worry-there are NO income limits for FHA home loans. Those who misunderstand the FHA loan program as a need-based home loan option are likely confusing FHA mortgages with USDA loans, which are need-based and DO have income limits. Real estate purchases with FHA loans are not the same as their USDA counterparts. FHA Mortgages Are Not Just For First-Time Home Buyers We repeat: FHA mortgages are not only for first-time home buyers, and they are not restricted to those who may fall into a lower income category. Any financially qualified borrower can be approved for an FHA mortgage as | more...

 
What Is An FHA REO Home?

What You Need To Know About FHA Home Loan Interest Rates

What does a new borrower need to know about home loan interest rates? There are many home loan blogs that discuss the fluctuations of mortgage rates and talk about those moves higher and lower. Some discuss the rates as though the ones mentioned could be offered to all applicants. Why isn’t this true? The rates you see advertised on the internet are usually posted as “best execution” interest rates which means that “ideal conditions” are assumed. What are those ideal conditions? An incredibly well-qualified borrower with high FICO scores, low debt ratios, and no credit issues. That means that the actual interest rate you are offered will vary from what you see posted online, and that the rate will depend on your FICO scores and other financial qualifications. But what | more...

 
HUD Announces Changes To Down Payment Assistance Rules

HUD Announces Changes To Down Payment Assistance Rules

The Department of Housing and Urban Development and the FHA have issued a Mortgagee Letter announcing changes to the rules for down payment assistance. FHA loan program rules permit the borrower to get assistance with the minimum required down payment-this assistance can come in the form of gift funds from family or friends, money from employers, or even down payment assistance programs. Government entities are permitted to provide such down payment help, too. In all cases, the down payment assistance must meet FHA loan requirements. Gifts cannot be loans in disguise; there must be no expectation of repayment of a gift of down payment funds. And now, thanks to revisions to the rules governing these issues in HUD 4000.1, government entities must meet certain requirements when providing down payment funds. | more...

 
FHA Loan Down Payment And Closing Costs

FHA Loan Down Payment And Closing Costs

The FHA home loan program has been described in other publications as being “the mortgage program first-time home buyers love”, but many people worry about closing costs and down payment requirements. How do you pay for FHA home loan closing costs and the down payment? The key is to first understand what these expenses are. FHA Home Loan Origination Fees and Other Closing Costs FHA home loans, like many other mortgage loan products, permit the lender to charge a loan origination fee. These fees will vary from lender to lender and it’s best to contact the lender directly to learn how much the origination fee might be. There may be other closing costs in addition to the ones mentioned below including expenses related to hazard insurance, compliance inspections, flood zone | more...