August 20, 2017

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Articles Tagged With: FHA Loan Questions

What Is An FHA Loan Limit?

What Is An FHA Loan Limit? Part Two

What Is An FHA Loan Limit? We’ve been exploring this question-in our previous blog post we looked at the basics of FHA loan limits. According to the FHA/HUD official site, “The maximum mortgage amount that FHA will insure on a specific purchase is calculated by multiplying the appropriate LTV percentage by the Adjusted Value. In order for FHA to insure this maximum mortgage amount, the Borrower must make a Minimum Required Investment (MRI) of at least 3.5 percent of the Adjusted Value.” FHA loan limits are set by the National Housing Act and will vary depending on the housing market. Some areas are low-cost markets, some are high-cost, and others are simply “average”. But what does that mean for the typical FHA loan applicant? The FHA loan handbook, HUD 4000.1, | more...

 
How FHA Loan Modification Works

How FHA Loan Modification Works

In our previous blog post, we discussed some of the basics of FHA foreclosure avoidance and loan modification. But how does FHA loan modification work? FHA HAMP, also known as the FHA Home Affordable Modification program is a way for home owners to avoid foreclosure through a permanent loan modification. But in order to become eligible for FHA HAMP, borrowers have to meet certain criteria as described on the FHA/HUD official site. Who is eligible to apply for FHA HAMP? “Mortgagors with FHA-insured mortgages that do not qualify for other loss mitigation programs and with adequate debt-to-income ratios. Homeowners must successfully complete a trial payment plan before becoming a full participant in the program.” The trial payment plan is the key to the success of the borrower’s involvement with HAMP. | more...

 
What is an FHA loan modification?

What Is An FHA Loan Modification?

What Is An FHA Loan Modification? According to the FHA loan handbook, HUD 4000.1, such modifications are part of a loss-mitigation program from the FHA and HUD designed to help FHA borrowers avoid foreclosure and keep their homes. HUD 4000.1 states that FHA loan modification is available through a program called FHA-HAMP, or the FHA Home Affordable Modification Program. “The use of an FHA-HAMP Option is to both alleviate the Borrower’s burden of immediate repayment of arrears and to adjust monthly payments to a level sustainable by the household’s current income. The FHA-HAMP Option may or may not include a Partial Claim.” A “partial claim” is defined in the FHA loan rules as follows: “The total amount available is the lesser of: (1) the unpaid principal balance as of the | more...

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

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

An FHA 203(k) mortgage is basically a rehab loan, which can be used as a new purchase loan or a refinance loan for the purpose of repairing/rehabbing an eligible property. The FHA single family home loan handbook, HUD 4000.1, has a list of requirements and guidelines for FHA 203(k) loans, which includes a set of allowable improvements as well as a list of things FHA loan money cannot be used for. Let’s examine what is permitted with an FHA 203(k) loan first. Borrowers who are approved for an FHA rehab loan may use the loan for any of the following projects acceptable to the lender: – costs of construction, repairs and rehabilitation; – architectural/engineering professional fees; – the 203(k) Consultant fee subject to the limits in the 203(k) Consultant Fee | more...

 
When Is An FHA Loan A Good Idea?

When Is An FHA Loan A Good Idea? Part Two

When is an FHA loan a good idea? There are plenty of new purchase options, but those who have existing home loans and want to refinance into lower payments or interest rates should also explore their FHA mortgage options. FHA Loans Are For Those Who Want To Refinance FHA Loans Borrowers with existing FHA mortgage loans should consider the FHA Streamline Refinance loan option. This type of FHA refi loan does not offer money back to the borrower (except for refunds of money paid up front for things that later get financed into the loan amount) but does require a benefit to the borrower in one of several forms: A lower monthly payment A lower interest rate A fixed rate (when refinancing out of an adjustable rate mortgage loan) There | more...

 
What is an FHA loan down payment?

What Is An FHA Loan Down Payment?

What is an FHA loan down payment? Most people in the house hunting process are familiar or will become familiar with down payments-the money required from the borrower up front which is paid against the principal of the loan. There’s a long-standing notion about the nature of down payments; if a borrower invests a large an amount money up front, they have a bigger stake in making on-time payments and remaining in good standing on the mortgage loan. But that idea isn’t addressed in the FHA loan rulebook. What is discussed is the nature of the minimum required cash investment or down payment on an FHA mortgage. All FHA loans for new purchases will require a minimum FHA loan down payment of 3.5% of the adjusted value of the home. | more...

 
Can I Get A Second FHA Appraisal?

What Is An FHA Loan Inspection?

What is an FHA loan inspection? That is a tricky question to answer because the very phrase “FHA home inspection” implies something that is not true; that the FHA puts a stamp of approval on homes promising the borrower that they are defect-free once “inspected”. There is no such thing as an FHA home inspection. There IS, however, an FHA home APPRAISAL. But borrowers tend to mistakenly assume that the appraisal process is the same thing as a home inspection. These two things could not be further apart. Home Inspections Are Optional, But Very Necessary A home inspection (not an FHA appraisal) is an optional process the borrower is responsible for arranging and paying for and is not associated with the FHA appraisal in any way. The inspection should be | more...

 
Where Can I Apply For An FHA Loan?

When Is An FHA Loan Assumable?

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 | more...

 
What is an FHA loan limit?

FHA Loan Questions: Credit Score

Do FHA loan rules require more than one credit score for a borrower to qualify for a mortgage loan? That’s what one reader wants to know this week: “Can you tell me if FHA can lend if someone only has one score? It’s a 621 score. This home buyer had a short sale four years ago and did not rebuild credit as she decided not to get any credit cards. She has a debit card and that is it. Please advise if one score would be accepted?” FHA loan rules for credit score requirements are found in HUD 4000.1, the FHA single-family home loan rule book. HUD 4000.1 has instructions to the lender for credit score requirements which include the following about what is called the Minimum Decision Credit Score: | more...

 

FHA Loan Appraisal Questions: Well Water Guidelines

A reader asked us an FHA loan appraisal question this week about a recent post we did on water quality issues. “We have been requiring a safe water test to verify the water standards are meet per the guidelines but we now have an Loan Officer arguing that it is not required unless the appraiser notes an issue. Is a water test really not required have I been reading the guidelines wrong since 2015?” The “we” in this case would seem to be a participating FHA lender. Is the loan officer mentioned in the question correct? We turned to the relevant passages in HUD 4000.1 to reaffirm what the FHA loan rule book says about water quality. “The Mortgagee must confirm that a connection is made to a public or | more...