Articles Tagged With: FHA Loan Questions

January 25, 2022

FHA Loans: Do Appraisals Transfer When Switching Lenders?

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...

September 8, 2020

What Is An FHA Loan Down Payment?

By Bruce Reichstein

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 upfront 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 amount of money upfront, 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 the 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. Naturally, the | more...

May 27, 2020

Budgeting And Saving For Your First FHA Mortgage

By Bruce Reichstein

When you decide to commit to buying a home or building one from the ground up using a one-time close construction loan, there are expenses you will need to save up for. If you haven’t started making a checklist of items you will need to pay for up front or choose to include in the loan amount, it’s a good idea to start making one as early as possible. Saving for your loan means identifying the expenses you will pay such as closing costs, appraisal fees, the home inspection fee, the FHA Up-Front Mortgage Insurance Premium, and of course the down payment. The down payment, which is a minimum of 3.5% of the adjusted value of the home, is one of the biggest expenses. That is one reason why it’s | more...

April 14, 2019

HUD Announces Findings In Illinois Housing Fraud Investigation

By Bruce Reichstein

The Department of Housing and Urban Development has announced its’ findings related to the investigation of allegations of housing fraud by a Cook County couple. According to a press release by HUD, “… a Cook County, Illinois couple committed fraud by accepting housing assistance they were not qualified to receive in order to rent a property they jointly owned.” HUD had conducted an investigation into a married couple’s attempts to get rental assistance for a property they own in Matteson, Illinois. HUD alleges that in 2006 the couple, Korey Sloan and Christie Caldwell, and their four children “sought rental assistance from the Housing Authority of Cook County (HACC) to lease the home from Sloan, who posed as an unrelated landlord”. HUD further states that Caldwell “denied any relationship” with Sloan | more...

June 8, 2018

FHA Loan Rules: Can The Seller Provide Appliances As Part Of The Sale?

By Bruce Reichstein

FHA home loan rules in HUD 40001. state that a seller can make contributions as an incentive to a buyer considering the purchase of the seller’s property with an FHA mortgage. But those contributions are limited to six percent of the purchase price. Anything more constitutes something known as an inducement to purchase. The FHA loan rules don’t penalize the borrower or seller for this per se, but anything deemed an inducement to purchase will result in a dollar-for-dollar reduction in the loan amount based on the financial value of those inducements (which, again, are in excess of six percent of the purchase price.) All that said, FHA loan rules also exclude certain seller contributions from consideration under the six percent rule; the seller can freely add certain things without | more...

November 24, 2017

Late or Missed Payments and FHA Loan Applications

By Joe Wallace

Is it possible to get an FHA loan application approved with late or missed payments on your credit report? It’s easy to get caught up in a struggle with common financial problems, and some of the simplest situations (late and missed payments on financial obligations) can have the biggest impact on a borrower’s credit rating or perceptions of creditworthiness. Having a handful “lates” and/or missed payments in your recent credit history might not affect your overall financial bottom line IF you’re not planning to seek new lines of credit. But if you are planning to apply for a home loan in the 12 months following late or missed payments, this situation becomes far more important. FHA loan applications, like other major lines of credit, are affected by anything that changes | more...

FHA Fixed-Rate Mortgages Versus Adjustable Rate Mortgages

October 12, 2017

Can I Get An FHA Mortgage After A Short Sale?

By Joe Wallace

Can I get an FHA loan after a short sale? Many have asked this question, unsure of the FHA loan rules for transactions in the wake of a negative credit event such as a foreclosure, bankruptcy, or short sale. To begin, we should address the basic definition of a short sale and what that means for a potential FHA borrower. What Is A Short Sale? A short sale involves a transaction where a property is sold to avoid foreclosure, often at a loss. It is referred to professionally as a “pre-foreclosure sale”. FHA loan rules in HUD 4000.1 specifically define the short sale transaction as follows: “Pre-Foreclosure Sales, also known as Short Sales, refer to the sales of real estate that generate proceeds that are less than the amount owed | more...

Can I buy a manufactured home with an FHA loan?

September 8, 2017

What Does “Legal Restrictions On Conveyance” Mean?

By Bruce Reichstein

What does “legal restrictions on conveyance” mean? It’s a question some borrowers won’t need to ask, but it is one that can and often does affect some transactions-especially where condo loans are concerned. FHA loan rules require the property that is purchased with an FHA loan to be “freely assumable”. That basically means there can be no limits imposed on the owner of the property on selling or otherwise disposing of the property. The lender is required to make sure there are no legal restrictions on the borrower in this way. What kind of restrictions do we mean here? One type is the “right of first refusal” found in some condo owner association agreements. Depending on the wording of such agreements, the owner may be required to allow the condo | more...

July 31, 2017

What Is An FHA Loan Limit? Part Two

By Joe Wallace

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...

July 27, 2017

How FHA Loan Modification Works

By Bruce Reichstein

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...