Articles in Category: Closing Costs

January 21, 2020

Rent Or Buy?

For some, buying is better. Why? Much depends on your financial goals but you should also take into consideration aesthetics and practical concerns, too. One argument in favor of buying or building (on your own lot) a home with an FHA mortgage? The ability to modify your property without having to go running to the landlord to ask permission is a big one. But some renters don’t realize that you can, when you own your home, also apply for a refinance loan to repair or modify your property. That is not something you can do with a rental unit. You’re basically at the mercy of the landlord in such cases. Another argument in favor of buying a home with an FHA mortgage instead of renting? The ability to purchase a | more...

January 2, 2020

How To Buy A Home In 2020

By Joe Wallace

Need to know how to buy a home in 2020? Making a plan to become a home owner includes budgeting, research, and even sharpening your negotiating skills. Are you ready to start your home loan journey? Shopping Around For A Home AND A Home Loan FHA mortgages allow first-time borrowers and experienced home owners alike to apply for a loan to buy or build a property. But you don’t have to limit your search to one kind of home OR one kind of FHA mortgage. For example, you could apply for an FHA Condo loan to purchase a condominium unit, or you could buy a mobile home or townhouse. FHA mortgage loans allow you to buy properties with as many as four living units, and that could be any number | more...

December 5, 2019

Who Qualifies For FHA Loans?

By Joe Wallace

Whether you’re interested in building a house from the ground up on your own lot or you need a mobile home or condo unit, there is an FHA home loan for you. Who qualifies for these mortgages and why? FHA Loans For First-Time Home Buyers FHA mortgages are open to first-time homebuyers without perfect credit. You can apply for an FHA home loan even with past credit mistakes; the best thing to do is to review your past credit and make sure your home loan application is turned in once you have a full year of on-time payments on your credit record. First-time borrowers should know an FHA mortgage, even an FHA One-Time Close construction loan is within their reach thanks to low 3.5% down payment requirements and the ability | more...

November 22, 2019

FHA Loan Rules And Mortgage Closing Costs

By Bruce Reichstein

FHA home loan rules for mortgage closing costs include a requirement that down payment funds come from approved sources, but there are plenty of other guidelines for the money you’ll need to pay at closing time. There are three basic categories when it comes to your home loan closing costs, some of which are subject to change. Some costs are fixed, and some can be increased by the lender depending on whether or there is a change in circumstances that affects the borrower’s credit rating, if there is a change in the down payment, or even the type of home loan (see below). When And How Closing Costs May Change There are certain rules that allow your lender to alter your closing costs. Under the right circumstances, those costs may | more...

FHA Loan Pre-Approval versus Home Loan Approval

November 1, 2019

FHA Loan Down Payment Help For Borrowers

By Bruce Reichstein

Even with the FHA loan program’s low 3.5% down payment requirement, some borrowers struggle to come up with the minimum required investment for the purchase of an existing home or construction of a new home. Fortunately, there is home loan down payment assistance available for borrowers from local agencies (the FHA itself does not provide down payment funds) and there are resources you can search to find the down payment help you need in your local area. But there are rules for down payment grants, home buyer grants, and other forms of down payment help. FHA loan rules say any down payment help must meet FHA requirements and must not be used in ways that are against the rules. For example, some well-intentioned groups may offer down payment funds to | more...

September 16, 2019

What You Should Know About FHA Home Loan Amounts

By Bruce Reichstein

Do you know what affects your FHA home loan amount? There are factors that the borrower controls such as whether to make the minimum required down payment or pay more down up front; there are also factors that are in the lender wheelhouse such as the amount of the origination fee and other closing costs. Not all of these factors automatically result in a different home loan amount. Some may be required to be paid up front in cash, others may permit financing in whole but not in part. Still, other expenses may not be required of all transactions but may apply to yours. You may find that in some housing markets, a charge or expense that is reasonable and customary may not be common in other housing markets. Some | more...

Does The Fed Interest Rate Cut Also Cut Mortgage Loan Rates?

August 28, 2019

The Confusion Over Closing Costs Versus Down Payment

By Bruce Reichstein

Some borrowers get confused over the differences between closing costs and the required minimum down payment of 3.5% needed for FHA home loans. The confusion often comes over what is considered a down payment versus what is considered to be part of the borrower’s closing costs. The most basic thing to know is that the FHA home loan down payment is a standalone payment. It is NOT reduced by the amount of closing costs you pay such as the lender’s fee, appraisal costs, title fees, inspection fees, etc. But that isn’t all-FHA home loan rules, for example, do not permit your down payment to come from the seller. But FHA loan rules DO permit your seller to contribute a certain amount toward the closing costs of the loan. Note the | more...

August 23, 2019

FHA Loan Down Payment Rules: When More Is Required

By Joe Wallace

FHA home loan down payment rules allow for a low 3.5% down for borrowers who qualify with FICO scores in the 580-or-above category. FHA loan minimums do not address lender standards, which may be higher, but that is one reason why it’s important to shop around for the right FHA lender. The low FHA loan down payment is one reason why FHA mortgages can be so attractive, especially for first-time home buyers. But when will a borrower be required to put a higher amount down on the mortgage? There are several instances to be mindful of. FHA Loan Transactions That Require 15% Down: Identity Of Interest The FHA Single Family Loan Handbook, HUD 4000.1, says there are circumstances where 15% down is required; often when there is an identity of | more...

August 20, 2019

FHA Home Loans, Down Payments, And More: What You Need To Know Today

By Bruce Reichstein

First-time borrowers have many questions about the FHA home loan process including the subjects of down payments, seller contributions, and down payment assistance. Borrowers need to know that there are certain federal laws that require FHA home loans to limit the contribution of any third party with a financial stake in the outcome of the mortgage, and it’s good to know how these rules work. Seller Contributions Versus Seller Downpayment Assistance FHA loan rules state clearly that the seller of the home may not contribute funds toward the borrower’s down payment. This is expressly forbidden in the FHA loan rulebook, HUD 4000.1. However, sellers are permitted to contribute toward the borrower’s closing costs, capped at a maximum of six percent of the adjusted price of the property. Contributions in excess | more...

July 31, 2019

FHA Home Loan Down Payment Rules: Cash To Close Sources

By Bruce Reichstein

FHA home loan down payment rules include requirements for the sourcing of funds used to make that down payment and/or provide cash to close the deal. Down payment funds and sources of cash to close must be properly documented by the lender to insure the cash does not come from unacceptable sources such as non-collateralized loans (payday loans, credit card cash advances, etc.) or in the form of “gift funds” that are not really gifts but have an expectation of repayment. When discussing the permitted sourcing of FHA home loan down payments or cash to close, many borrowers want to know if certain kinds of sources are acceptable to the lender. That can include proceeds from the trade-in of a manufactured home, the proceeds from the sale of real estate, | more...