August 17, 2017

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Articles in Category: Adjustable Rate Mortgage

What Can I Rehab With An FHA 203(k) Mortgage?

What Is An FHA Loan Rate? FHA ARM Loans and Fixed Rate FHA Mortgages

What is an FHA loan rate? We discussed this question in our last blog post-that the FHA and HUD do not set or regulate interest rates on FHA mortgages, the ability of the borrower to buy discount points in order to lower the FHA loan rate up front, and how a borrower’s FICO scores can affect the kind of mortgage rates offered by the lender. But there is still an important issue to cover-the difference between how fixed rate FHA mortgages work and how FHA adjustable rate mortgage loans (ARM loans) work. What are the primary differences between an FHA fixed-rate loan and an FHA ARM loan? FHA Fixed Rate Mortgage Loans FHA fixed rate mortgages feature one interest rate, negotiated up front between the borrower and lender. Once the | more...

 
How Do FHA Loan Appraisals Work?

What Is An FHA Loan And Who Qualifies?

What is an FHA loan and who qualifies? These are common questions, especially for first-time home buyers looking at all their options from conventional mortgages to FHA loans. What Is An FHA Home Loan? Simply put, an FHA mortgage is a home loan that has been guaranteed by the government, making the mortgage safer for the lender and less expensive for the borrower. The FHA single family home loan program is designed for borrowers who are financially qualified with FICO scores at 580 or better for maximum financing. (Lender FICO score requirements may be higher than FHA minimums.) An FHA mortgage as described here is intended for owner-occupiers and is meant for primary residences. That means that time shares, vacation homes, and other occasional-occupancy properties cannot be purchased with an | more...

 
Where Can I Refinance An FHA Loan? Part Two

Where Do You Get An FHA Loan?

When you’re ready to apply, where do you get an FHA loan? There are plenty of misconceptions about the FHA home loan process, which usually get cleared up fairly quickly once you begin working with a participating FHA lender. But in the planning and saving stages of the loan, it’s good to know the facts about FHA loans, where to get them, and how they work. FHA Loans Are Offered By Participating Lenders Not all lenders participate in the FHA loan program, some are not permitted to participate, and some may not be certified by the FHA yet. Borrowers who need an FHA mortgage will need to find an active, participating lender who can qualify or prequalify the borrower for a mortgage loan. Participating lenders advertise their affiliation with the | more...

 

FHA Adjustable Rate Mortgage Rules: Rates, Term, and Adjustments

Some potential FHA borrowers might be surprised to learn that an FHA adjustable rate mortgage (FHA ARM) is an option to consider, but for those with specific financial needs and goals, an FHA ARM loan might be a very good idea. FHA adjustable rate mortgages have specific controls over how much and when an interest rate change may occur, but there are other rules that also affect this type of FHA mortgage. All the rules for FHA ARM loans are found in HUD 4000.1, the FHA Single Family Loan Handbook. It says that the initial rate and margin are established by the lender, and that the margin must be constant over the entire term of the mortgage. Furthermore, “The interest rate must remain constant for an initial period of 1, | more...

 

FHA Adjustable Rate Mortgages in 2017

Are you looking for an FHA adjustable rate mortgage in 2017? FHA single family home loans come in a variety of types including fixed-rate loans and FHA adjustable rate mortgages. The rules for these loans, commonly referred to as FHA ARM loans, are spelled out in HUD 4000.1, the FHA loan handbook. FHA adjustable rate loans can be different than their conventional counterparts, starting with certain restrictions on how often the interest rate may change. Before we dive into that issue, let’s examine how HUD 4000.1 defines the FHA ARM loan: “An Adjustable Rate Mortgage (ARM) refers to a Mortgage in which the interest rate can change annually based on an index plus a margin.” Your loan officer is required to provide a disclosure form, which must be signed, that | more...

 

Getting Ready For An FHA Mortgage Loan

Getting ready for an FHA mortgage loan doesn’t just mean checking your credit report and FICO scores, saving up money for a down payment, and reducing your debt-to-income ratio. It also means making important choices about your home and mortgage needs. Some of these choices may need to be made early in the preparation stage, others may come later depending on the type of home you decide to buy. Are you ready for an FHA mortgage loan? Type Of Home Believe it or not, the nature of the property you buy with your FHA mortgage loan could affect the type of home loan you apply for. A typical suburban home isn’t the same as a mobile home or a condo. The loans for a condo or manufactured home have different | more...

 

An FHA Mortgage Post-Bankruptcy?

Is a mortgage loan possible after bankruptcy? When it comes to FHA home loans the answer is yes, as long as the borrower meets FHA loan standards and sits out a mandatory waiting period (which may vary depending on the bankruptcy, state law, and lender standards). One reader asked a question this week about bankruptcy and FHA loans: “My credit rating is 677 as of 5/18/2017. My income is established by a job that Ive held for over 15 years. My bankruptcy was completed in July of 2011. Can I qualify for an FHA mortgage?” There are many issues at work in situations like these including whether or not the borrower has established a satisfactory pattern of credit activity following the bankruptcy action. The mandatory waiting period (under FHA standards, | more...

 

FHA Loan Rules For Bankruptcy: Chapter 7 and Chapter 13

We’ve had a number of reader questions in our comments section recently asking about scenarios for loan approval that involve bankruptcy and related issues. Can a borrower get a new FHA loan following a bankruptcy? Under what conditions? FHA loan rules in HUD 4000.1 address this issue with separate entries for Chapter 7 and Chapter 13. According to the FHA loan rule book, Chapter 7 requires the lender to observe the following: “A Chapter 7 bankruptcy (liquidation) does not disqualify a Borrower from obtaining an FHA-insured Mortgage if, at the time of case number assignment, at least two years have elapsed since the date of the bankruptcy discharge. During this time, the Borrower must have: – re-established good credit; or – chosen not to incur new credit obligations.” HUD 4000.1 | more...

 
what is mortgage insurance and how does it work?

FHA Mortgages For Multi-Unit Properties

A reader asked us a question this week in the comments section about FHA mortgages for properties with multiple units. “I want to buy a 6 residential unit apartment building with a very small store front commercial space on the property (computer repair shop that takes up about 15% of the property space) I plan on living in one of the apartment units. Is there an FHA loan out there for this situation?” FHA mortgages under the single family loan program do allow FHA loans to qualified borrowers for multi-unit properties. The rules for these purchases are found in HUD 4000.1, which states: “FHAs programs differ from one another primarily in terms of what types of Properties and financing are eligible. Except as otherwise stated in this SF Handbook, FHAs | more...

 

Cash To Close And Earnest Money: FHA Loan Rules

All home loans have requirements for cash to close the deal, earnest money, and down payments. The FHA loan rules for these are found in HUD 4000.1, which has instructions to the lender on how to verify and process these payments. For example, on page 296 of HUD 4000.1, we learn the following: “The Mortgagee may only consider assets derived from acceptable sources in accordance with the requirements outlined below. Closing costs, prepaid items and other fees may not be applied towards the Borrowers Minimum Required Investment” also known as the down payment. Sources of cash to close and earnest money must be properly documented by the lender. FHA loan rules do not permit non-collateralized loans such as credit card cash advances or payday loans to be used for the | more...