Articles by: Bruce Reichstein

June 19, 2024

Before You Buy Your First Home

FHA home loans have a down payment requirement, the same as many other home loans. Earnest money is also an important early financial consideration. Planning and saving for both are part of the loan process, and you want to start as early as possible. Below, we examine some common issues related to both down payments and earnest money. What To Know Earnest Money And Down Payment Money Earnest money is paid at offer time. You do not pay earnest money at closing time. A down payment is made on closing day in addition to closing costs. Earnest money is paid into an escrow account. In the event that an FHA loan is canceled, the earnest money may be refunded to the borrower in the right circumstances, such as when the | more...

June 12, 2024

FHA Appraisals: What To Remember

By Bruce Reichstein

The FHA appraisal is one of the most important pre-closing day aspects of your home loan process. Without an appraisal, your lender can’t know if the home meets minimum basic standards for safety, remaining economic life, and serviceability. The lender also can’t make a realistic judgment about the fair market value of the home without an appraisal. What should you know about this process and how it affects you? FHA appraisals are a tool for the lender and not a tool for the borrower. You may be privy to the results of the appraisal, but that does not mean it was designed to help you as a borrower. It is not meant to tell the borrower anything actionable, especially where the condition of the home is concerned. That is the | more...

June 6, 2024

Home Loan Choices

By Bruce Reichstein

Every part of the home loan process has a set of choices to make. For most house hunters this process begins with the decision to own your own home and quit renting. What other choices await you on the road to homeownership? Interest Rate Options: Conventional, FHA, Fixed, Adjustable No matter which type of home loan you choose, VA, FHA, USDA, or conventional, you’ll need to decide whether to apply for a fixed or adjustable mortgage. The fixed-rate loan is good for those who need a predictable house payment for the full duration of the mortgage. Unless you refinance, the rate will not change. An adjustable-rate mortgage has an introductory period (typically at a lower rate) followed by periods of rate adjustments. FHA adjustable-rate mortgages may, for some borrowers, be | more...

May 14, 2024

Why Get Pre-Approved For An FHA Home Loan?

By Bruce Reichstein

Why get pre-approved for an FHA mortgage? This is a question some first-time home buyers ask, and the answers can make a big difference in how you approach your home loan. FHA Home Loan Pre-Approval Does Not Commit You To A Mortgage When you fill out the forms to be pre-approved for a home loan, you are not committing to the transaction in the sense that you would be financially obligated to buy. The borrower is not legally committed to a purchase when getting pre-approved. Home loan pre-approval actually helps you be taken seriously as a buyer when you do find a home you’re ready to commit to. The buyer takes a pre-approved borrower more seriously and you may find that a pre-approval letter (depending on the housing market) is | more...

May 1, 2024

What To Know About FHA Loan Application Documents

By Bruce Reichstein

There is documentation required to process your home loan application and knowing what you need to submit in advance will speed up your home loan application journey. Do you know what your home loan or refinance loan transaction requires of you? The lender requires tax documents, information about the sources of your down payment, access to your credit reports, and more. But there are rules about who provides these documents, and you’ll need to be aware of them when gathering your paperwork. FHA Loan Rules On Documentation Some of the information your lender needs comes from you personally. This includes your photo identification and proof of legal residence in the USA (which may be required where applicable). FHA loan rules say you do not have to be a citizen to | 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 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...

April 2, 2024

FHA Home Equity Conversion Mortgages In 2024

By Bruce Reichstein

As further news comes in about improving housing market conditions (however slowly the market may improve), some homeowners are again thinking about their options, including FHA refinance loans and programs that let borrowers take the equity in their homes out in cash. For those reviewing FHA loans, options can include cash-out refinancing as well as an option for those 62 or older who own their homes or have nearly paid them off. FHA Reverse Mortgage Facts The FHA reverse mortgage allows a qualified borrower to get cash at closing time on a loan that is not due until the borrower dies, sells the home, or stops using it as their home address. Borrowers do not make mortgage payments with an FHA reverse mortgage. However, there are payments to be made. | more...

March 14, 2024

Is It Time To Buy A Home With An FHA Mortgage?

By Bruce Reichstein

Some borrowers are not sure if they are truly ready to buy a house with an FHA mortgage. Not in the financial sense. For this article, we do not mean “ready” in the sense that a borrower has saved a down payment, worked hard on credit, and has a budget plan that includes the new mortgage payment. In this article, being “ready” means deciding to stop renting and start owning a home. Running The Numbers Before You Shop Get a calculator ready if you need to answer the rent-versus-own question. Compare the current rental options with the cost of owning. Ask yourself, how much is your rent? What about renter’s insurance, monthly utility expenses, and other costs like parking and trash removal? How does that amount compare to the costs | more...

March 11, 2024

FHA Loan Down Payment Advice

By Bruce Reichstein

Are you looking for a home loan with a lower downpayment requirement? In 2024, FHA home loans are a smart option to consider in such cases as the housing market slowly tries to recover. These down payments are often lower than their conventional mortgage equivalents, and borrowers who struggle to come up with the 20% down needed to avoid conventional private mortgage insurance, which is required on a conventional mortgage, may find a better option in the FHA loan program. According to the Consumer Financial Protection Bureau, those who don’t pay 20% down on a conventional loan may encounter down payment requirements of up to 15%. “Most lenders offer conventional loans with PMI for down payments ranging from 5 percent to 15 percent.” The Bureau adds that “some lenders may | more...