Articles in Category: FHA Requirements

May 21, 2024

Five Tips About FHA Mortgage Loan Interest Rates

FHA mortgages feature lower interest rates than conventional mortgages thanks to being backed by the U.S. government. And while mortgage rates in 2024 are higher than in years past, FHA borrowers may still qualify for a rate that’s lower than some conventional equivalents. Those who qualify for the lowest down payment save money over the lifetime of their mortgages thanks to the lower rates, but how do you qualify for the lowest rate possible for your specific purchase? Here are some important tips about mortgage loan interest rates you should know in the planning stages of your new home loan. Credit Scores And Interest Rates Are Connected That statement does not pertain to the overall interest rate offered to all borrowers. Your lender will offer you a mortgage loan rate | more...

May 15, 2024

Buying A Home? Ask The Seller These Questions

By Joe Wallace

Are you looking for a home to buy with an FHA loan? It’s good to create a list of questions to ask the seller. Making the most informed decision you can on a specific house is important, and in addition to what you learn by asking about natural disasters in the area, property taxes, and the age of the roof, the way the seller responds to your question can be just as important as the answer you get. Asking Questions You should definitely do your own research on the local area to learn whether floods, tornadoes, hurricanes, or other natural disasters are a problem. But don’t miss the chance to ask the seller, even if you already know the answers. Ask the seller, “Has the home itself experienced a disaster, | 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 13, 2024

FHA Appraisal Guidelines You Should Know

By Joe Wallace

The FHA and HUD have reformed parts of the FHA single-family home loan appraisal guidelines found in HUD 4000.1. These changes are meant to improve the process for reconsidering an FHA appraisal in cases where there may be defects or violations of FHA policy. Can I Get A Revised FHA Appraisal? Was your FHA appraisal is flawed? In such cases the borrower or lender may be allowed to request a Recosideration of Value (ROV). An ROV is essentially a review of the appraisal to correct report deficiencies or problems with HUD regulatory compliance. You should not expect to be allowed a second appraisal only because the value comes in lower than anticipated. What HUD Says About ROVs The HUD official site says, “A Reconsideration of Value (ROV) refers to a | more...

May 9, 2024

When You Are Ready To Apply For Your FHA Mortgage

By Joe Wallace

When a borrower has the down payment funds and feels ready to commit to the house-hunting journey, applying to be pre-approved or pre-qualified for an FHA mortgage is the next logical step. But there are a few things to review before you begin. Gather Your Documents And Know Your Financials Applying for a loan includes bringing financial data to the bargaining table. You must gather two years of tax returns, you should know specifics about annual gross and net income, and be ready to give the lender information about outgoing debt, your current credit scores, and any other non-employment sources of income you want counted for loan approval purposes. Your lender requires this information to begin. Some situations require more information than others. For example, small business owners may be | more...

May 8, 2024

FHA Appraisal Rules Change To Help Borrowers

By Joe Wallace

The FHA and HUD have revised appraisal rules for FHA single-family loans. Among the changes, FHA lenders must now provide home buyers with “clarified guidelines to contest an appraisal or request a reconsideration of value (ROV.) “root out racial, ethnic, or national origin bias in residential property valuations” on homes purchased with FHA mortgages.” HUD Publishes Its New Appraisal Guidelines A HUD mortgagee letter published in May 2024 says there are important changes in HUD’s Nondiscrimination Policy, Appraiser Conduct, and other Federal Housing Administration (FHA) Roster Appraiser requirements. The goal is to create more equity in the appraisal process and “ensure appraisals for insured Mortgages are performed in a competent, independent, impartial, and objective manner” and that appraisers conform to what HUD calls the “Competency Rule.” Changes To FHA Appraisal | more...

May 2, 2024

Can You Lose Earnest Money With An FHA Mortgage?

By Joe Wallace

There are many different types of home loans, but most of them have one thing in common: the need to use home loan earnest money as a serious buyer. You don’t have to save or plan for earnest money when you are preparing for a home loan, but it is a bad idea not to, as we examine below. Earnest Money Defined Fannie Mae has an article on its official site discussing the nature of earnest money. That discussion includes the following: “Buyers demonstrate their commitment to purchasing a home by submitting an earnest money deposit. This money is held temporarily in an escrow account along with their offer.” NerdWallet.com also rings in, saying “Earnest money is a good-faith deposit you make on a home to show the seller you’re | 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 30, 2024

FHA Home Loan Facts To Know Before You Buy

By Joe Wallace

Many articles discuss what you can and cannot do with an FHA mortgage, such as the types of homes you can buy or whether or not you can earn money from a house you purchase with an FHA loan. But there are other issues you should know in the don’t department. For example, did you know you can finance certain closing costs, including the FHA upfront mortgage insurance premium? However, rules govern that portion of the transaction. The big takeaway from those rules is that you can’t finance a portion of that up-front mortgage insurance premium. FHA loan rules (not the lender’s requirements) state that a borrower pays the loan in full or finances it in full at closing time. There are other similar issues to know when you are | 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...