December 10, 2019

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Articles Tagged With: Escrow

Why Did My Mortgage Payment Increase?

Why Did My Mortgage Payment Increase?

There may be circumstances where you find your mortgage payment has increased. There are several reasons why a mortgage payment might increase; regardless of which issue may be affecting your loan it’s crucial to address it right away. Mortgage Payment Increases Due To Interest Rate Adjustment If you have an FHA Adjustable Rate Mortgage, your mortgage payment increases when there is a scheduled interest rate adjustment on the mortgage. The government watchdog agency known as CFPB, the Consumer Financial Protection Bureau, advises, “Some homeowners believe that they have a fixed-rate mortgage loan when their loan actually includes an adjustable-rate or some other feature that can cause their interest rate and payment to change.” Changes To Your Property Taxes If you notice an increase in your mortgage payment, check your monthly | more...

 
FHA Home Loan Rules For Construction Loan Escrow Accounts

FHA Home Loan Rules For Construction Loan Escrow Accounts

Do you need a construction loan to build on your own land? The FHA One-Time Close construction loan can help you do just that; this mortgage features one loan application and closing date to build your house, and you aren’t required to pay more than the usual low 3.5% down payment for qualified borrowers. When using a construction loan, the borrower will need to use an escrow account to make the payments for labor, materials, and other construction costs. But there are rules that govern how these “draws” are to be made; HUD 4000.1 contains those rules, which include the following instructions to the lender: “At closing, after funds are disbursed to cover the purchase of the land, the balance of the mortgage proceeds must be placed in an escrow | more...

 
Build Your Dream Home: FHA One-Time Close Construction Mortgages

What Should I Know About FHA Home Loan Escrow Account Rules?

What should I know about FHA loan escrow account rules? Depending on the nature of your transaction, lender standards, and other issues, you may be required to use an escrow account to complete or maintain your FHA mortgage. The rules for escrow accounts to be used in FHA loan transactions are found in the FHA loan handbook, HUD 4000.1. The section governing escrow includes guidance that such accounts must be established in accordance with procedures defined in the Real Estate Settlement Procedures Act. The escrow account must be maintained in order to meet monthly financial obligations including the following (where applicable) as found in HUD 4000.1: -hazard insurance premiums; -real estate taxes; -Mortgage Insurance Premiums (MIP); -special assessments, including any assessments related to a PACE obligation; -flood insurance premiums if | more...

 
Credit Scores For An FHA Home Loan: When Low Credit Is Not Bad Credit

Who Are FHA Loans Good For? Part Two

Who are FHA loans good for? We’re examining this issue to help clear up some myths and misconceptions about the FHA loan program including the notion that FHA loans are only intended for first-time home buyers (FHA loans are available to all financially qualified borrowers) and the idea that FHA mortgages have an income limit that prevents those with greater incomes from applying (not true). Who Are FHA Loans Good For? FHA loans are good for both first time buyers and those who have returned to house-hunting after owning property. For second-time house hunters (and beyond) the most important thing to remember is that FHA loans have an occupancy requirement and you can only purchase a primary residence with an FHA loan. No timeshares, vacation homes, or other “occasional occupancy” | more...

 
FHA disaster relief changes

FHA 203(k) Rehab Loans: Eligible Repairs

In our previous blog post, we discussed the idea that an FHA 203(k) rehab loan could be used to purchase and modify a property to meet FHA requirements for properties to be no more than four units. In HUD 4000.1, under the list of eligible improvements, we learn that “decreasing an existing multi-unit Structure to a one- to four-family Structure” is one of those approved uses of the loan. But what are the other uses? In the original blog post we had a partial list, but there is a complete (at the time of this writing) list of what is considered an eligible use of FHA 203(k) rehab loan funds. The FHA loan rule book states that the improvements on this list is not exhaustive and that what you see | 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...

 
FHA Loans And Natural Disasters: What You Should Know

FHA Appraisal Rules: Water Purification Systems

What are the FHA appraisal rules for properties served by water purification systems? A reader asked us a question about that recently: “Im interested in a property that has a UV purification system. Does that qualify under an FHA loan?” A quick look FHA appraisal rules in this area reveals no references that specifically, at the time of this writing, mention UV purification. Instead, they address water purification in general, requiring that any such systems meet basic standards. What are those standards? From HUD 4000.1 we learn that the lender has a responsibility to the borrower in such cases” “If a Property does not have access to a continuous supply of safe and potable water without the use of a water purification system, the Mortgagee must ensure that the Property | more...

 
FHA home loans

Cash Back To The Borrower and FHA Loans

Do FHA loans permit cash back to the borrower? We get many reader questions in our comments section about this subject. Some want to know if they can borrow more than the cost of the home and use the excess funds for personal use. Others want to know if cash-back refinance options are available on FHA mortgages. The rules that govern cash back to the borrower can be found in HUD 4000.1. As a general rule, FHA loans for “forward mortgages”, which means typical house purchases, do not allow cash back to the borrower. There’s an exception for money that was paid up front for something that was later permitted to be included into the loan amount. That would be considered a refund and is not forbidden by FHA loan | more...

 
How much can I borrow with an FHA refinance loan?

FHA Updates PACE Policy

A new mortgagee letter updates FHA loan policy on properties bought with FHA loans that are “encumbered with a Property Assessed Clean Energy obligation”. Mortgagee Letter 2017-06 updates PACE policy starting with a reminder; “The terms and conditions of a PACE obligation may vary by state, local government, and PACE program. Generally, a PACE obligation is secured and collected in the same manner as a special assessment is treated by the local government; funds obligated are not paid directly by the Borrower to the party providing the PACE financing.” When the sale happens (including foreclosure sales), if a property has “outstanding PACE financing” the obligation will, according to the mortgagee letter, “continue with the property causing the new homeowner to be responsible for the payments on the outstanding PACE amount. | more...

 

FHA Loan Basics: A Reader Question

A reader asks, “I really don’t understand why i have to pay PMI and MIP. I had credit problems a bankruptcy in 2013 , it was recorded and its been almost 4 years and my score is 709 that the middle score i have hardly no debts, 6% of income. I was told I have to pay the MIP up front of 1.75% and also 240 PMI monthly with mortgage. That’s a little too much, is there a way out of this? I also did not want taxes and insurance added, I’m putting 3.5 percent down. My loan officer said I had to pay the insurance and add taxes to my loan.” It’s not entirely clear from this reader question whether the loan is an FHA mortgage or not, but | more...