Articles in Category: FHA Guidelines

Information You Need To Pre-Qualify Or Get Pre-Approved For A Mortgage

May 4, 2022

FHA Appraisals: Facts You Should Know

Some FHA borrowers wonder about how the appraisal works. It’s a process that can seem a bit mysterious until you understand the hows and whys. What do you need to know about FHA appraisals to help you make the most informed choices about a particular home? FHA Appraisal Facts: The Appraisal Is A Tool For Your Lender, Not For You Appraisals help the lender make sure the home meets the bare minimum standard for safety and habitability. It also helps the participating FHA lender establish the fair market value of the home. It is not a tool for the borrower in any way except to provide the dollar amount for the market value. FHA Appraisal Facts: Standards Vary What applies in one housing market may not apply in another. By | more...

March 25, 2022

Five Reasons To Buy Your First Real Estate With An FHA Home Loan

By Bruce Reichstein

FHA home loans are a great way to make your first real estate purchase. Are you looking at homes for sale and trying to decide which is the best mortgage loan for you? If you are a first-time home buyer and feel a bit confused by what your real estate agent finds in MLS listing data while searching for “houses near me”, remember that the FHA mortgage loan option is available to anyone who financially qualifies. If you are talking to a real estate agent, do not forget that FHA loans are not restricted to first-time homebuyers or those who have never owned property before. You can own other property and still buy a home to live in as your primary residence using an FHA loan whether you’ve purchased another | more...

February 22, 2022

FHA Home Loan Rules And Airbnb

By Bruce Reichstein

Is it possible to buy a home with an FHA loan to use as an Airbnb-type venture? Borrowers are eligible to apply for FHA home loans for up to four-unit residences; what do FHA loan rules say about using the home as a rental space? FHA loan rules governing these situations are found in HUD 4000.1. Borrowers may feel encouraged by the notion that owner-occupied properties with up to four units can by purchased with an FHA mortgage, and even more encouraged that the rules actually do address (and permit) borrowers to rent out the unused living potions. However, renting these units out is also subject to FHA loan rules (in addition to lender requirements and state law). What does HUD 4000.1 say about using spaces in your home purchased | more...

First-Time Home Buyer Advice: Get A Home Inspection

February 18, 2022

FHA Loans and Home Inspections

By Joe Wallace

The difference between an FHA appraisal and a home inspection is a serious issue. Borrowers applying for an FHA mortgage to buy a home are required to 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 the purpose of the appraisal is to establish the home’s fair market value and to make sure that the home meets the minimum standards. But the appraisal is not intended to discover any/all | more...

February 7, 2022

What You Should Know About FHA Mortgage Loan Rate Lock Agreements

By Joe Wallace

What should FHA home loan applicants know about the practice of mortgage interest rate lock commitments? This is an important detail of your home loan and it’s best to know how the interest rate lock agreement works ahead of time so you know how and why this part of the mortgage loan process works. What Is An FHA Mortgage Loan Interest Rate Lock Agreement? An interest rate lock protects a borrower from the daily mortgage rate fluctuations that happen naturally due to investor behavior, or other market forces that can change rates. An interest rate lock commitment is not automatic; it must be formally agreed to in writing between the borrower and the lender. An interest rate lock commitment does exactly what it sounds like it does-the lender and borrower | more...

January 25, 2022

FHA Loans: Do Appraisals Transfer When Switching Lenders?

By Bruce Reichstein

Sometimes a home loan goes smoothly from start to finish. Other times, it may not. In some cases, a borrower may choose not to purchase a particular home after all and continue looking. In others, a borrower may be happy with the home, but not so pleased with the lender. In situations where a borrower wants to switch lenders, is it possible to transfer an FHA appraisal to the new lender? This is a not-so-common question, but an important one for those who need to know. What does HUD 4000.1 have to say about appraisal transfers? Quite a bit, it turns out. From HUD 4000.1: “In cases where a Borrower has switched Mortgagees, the first Mortgagee must, at the Borrowers request, transfer the appraisal to the second Mortgagee within five | more...

January 7, 2022

FHA Home Loans: The Escape Clause

By Bruce Reichstein

Of course it’s not formally known as the “escape clause” but first-time homebuyers should know about the FHA home loan rules that govern what happens if the appraised value of the home comes in lower than the asking price of the real estate. HUD 4000.1 instructs the lender that a clause must be inserted into any legally binding commitment to purchase the home that guarantees that the borrower does not forfeit earnest money or retain an obligation to purchase the property if the appraisal is lower than the sale price. The wording of such a clause is suggested in HUD 4000.1 (page 117) as something to this effect: “It is expressly agreed that notwithstanding any other provisions of this contract, the purchaser shall not be obligated to complete the purchase | more...

FHA Home Loan Down Payment Rules: Cash To Close Sources

December 21, 2021

FHA Home Loan Approval Issues You Should Know

By Joe Wallace

If you are planning to buy a home with an FHA mortgage but aren’t sure whether you will be approved for the loan, you might find some help with our list if important FHA loan issues to consider as you plan and save for your mortgage. How Much Time You’ve Spent Working Your participating lender will review your employment history. Basically, they want to see how much time you have in your current capacity as a full-time employee earning salary, commission, or a combination of those. If you are self-employed, how long have you been working in that capacity? That will be an important factor for the lender. Your loan officer must review the last two years of your work history. Does that require you to have two years of | more...

December 17, 2021

When Is An FHA Loan Assumable?

By Bruce Reichstein

When is an FHA loan assumable? Let’s start by examining what the FHA single-family home loan handbook, HUD 4000.1, defines as a loan assumption. “Assumption refers to the transfer of an existing mortgage obligation from an existing Borrower to the assuming Borrower.” An FHA loan assumption is generally possible-for most FHA loans closed today, the lender’s participation and approval will be required in order to carry out a loan assumption transaction. There are also occupancy requirements which may apply depending on what year the original mortgage was closed in. From HUD 4000.1: “If the original Mortgage was closed on or after December 15, 1989, the assuming Borrower must intend to occupy the Property as a Principal Residence or HUD-approved Secondary Residence. If the original Mortgage was closed prior to December | more...

First Time Home Buyers: Improve Your Credit With Credit Monitoring

December 15, 2021

FHA Home Loans: Not All Are “Typical” Mortgages

By Bruce Reichstein

Not every home loan application is a typical one. You might be trying to buy a home that doesn’t meet FHA loan appraisal requirements–if you try to apply with a new purchase loan you might not be approved in such cases. But if you are buying a fixer-upper home with an FHA rehabilitation loan you won’t be required to have the home pass the appraisal when the loan closes but you are required to bring it up to minimum standards as a condition of loan approval. See how choosing the right FHA mortgage can make the difference sometimes between loan approval and loan denial? There are plenty of unique situations a lender might encounter–one of them could be yours. For example, are you trying to refinance a home you inherited? | more...