Articles Tagged With: FHA Loan Requirements

October 15, 2015

Types of FHA Refinance Loans: HUD 4000.1

We’ve written elsewhere about the different types of FHA refinance loans, but we haven’t covered what the new FHA Single Family loan program policy handbook (HUD 4000.1) has to say about them. In many cases, HUD 4000.1 either updates or restates existing policy, and in others the new handbook replaces or supersedes the old policies. It’s impossible to know every single alteration in FHA loan rules that have been printed in the new handbook, so we’re simply reporting what the new rules say to clear up any confusion over FHA loan rules old and new. Here’s what HUD 4000.1 has to say about the different types of FHA refinance loans now available: (Remember that not all participating lenders offer each and every type of FHA loan product, so if you | more...

October 13, 2015

FHA Loan Credit Questions: Delinquent Rent Payments

By Joe Wallace

A reader asked us a question in the comments section recently about FHA loan applications and missed payments. “I have let family members rent 2 apartments in my name and they left them early which left me with the bill–will that keep me from qualifying for a FHA loan?” The answer to this question depends on several things. Was this simply a case of breaking a lease? If so, was the rent paid on time before the lease was broken? If there are late or missing payments, that could be an issue depending on circumstances, the lender, and whether the payment issue was ever resolved. Any debt in the borrower’s name would be examined by the lender, even if it was to help out another family member. Co-signing is also | more...

October 10, 2015

Mortgage Rate Trends: Ending The Week Holding Steady After Upward Movement

By Joe Wallace

Mortgage rates closed out a week of upward movement with a hold-steady day on Friday. The three-day bank holiday weekend had rates staying still as bond market activity drew to a close in anticipation of the short trading week to come, so 30-year fixed rate mortgages are basically at 3.875% best execution, though our sources report some lenders may offer extremely well-qualified applicants something closer to 3.75% (best execution). FHA mortgage rates ended the week at 3.5% best execution. It’s far too early to tell whether this might be a new “comfort zone” for FHA rates–the last one was 3.75% and that held out for a long time–but if upward pressure continues on rates, it’s likely we’ll see that number fade away in favor of that previous 3.75%. But next | more...

October 9, 2015

Mortgage Rate Trends: Moving Higher

By Joe Wallace

It’s been a harder week for rates–last week we saw improvement on a daily or near-daily basis. This week, the opposite was true. On Thursday rates climbed higher, pushing 30-year fixed rate conventional mortgage loan interest rates out of their previous best-execution range (between 3.75% and 3.875%, depending on the lender and other factors) into a single, higher rate (3.875% best execution). FHA mortgage rates are still being reported at a best execution 3.5%, though if the upward trend persists, we’ll likely see that break out into a range of rates with 3.5% at the bottom end. If upward pressure continues over the short term, that range could consolidate into a higher best-execution rate. FHA rates have in the past tended to find a “comfort zone” and remain there, but | more...

What you should know about FHA 203(h) Loans For Disaster Victims

October 7, 2015

FHA Loans, HUD 4000.1, and Second Appraisals: When One Can Be Ordered

By Joe Wallace

In our last blog post we discussed FHA appraisals, and the fact that FHA loan rules do not permit the request of a second appraisal simply to raise the value of the property or to eliminate required corrections listed on the original appraisal report. So when can the lender order a second appraisal? What circumstances justify this action? The answer can be found in HUD 4000.1, Section II, Part A. According to this part of the FHA loan rules under “Second Appraisals By Original Mortgagee”: “A second appraisal may only be ordered if the Direct Endorsement (DE) underwriter (underwriter) determines the first appraisal is materially deficient and the Appraiser is unable or uncooperative in resolving the deficiency. The Mortgagee must fully document the deficiency and status of the appraisal in | more...

October 5, 2015

FHA Loan Rules, Citizenship, And The New HUD 4000.1 Rule Book

By Joe Wallace

In our comments section, a reader asked if citizenship is a necessity in order to get an FHA home loan. The reader mentioned that he was in the process of getting a Green Card, and that he had a valid Social Security Number. Do FHA loan rules as published in the new HUD 4000.1 permit this reader to apply for a new FHA mortgage loan even though he is not a United States Citizen? The answer is yes–citizenship is NOT a requirement to apply for an FHA mortgage. Proof of a valid Social Security Number is, and since the reader indicated that he had a valid SSN, the only thing needed to move forward is to find a participating FHA lender and fill out the loan application paperwork. Assuming, of | more...

October 2, 2015

Mortgage Rates: Lower Ahead Of Jobs Data

By Joe Wallace

At the end of the business day on Thursday, mortgage loan rates had fallen again, making a fourth straight day this week of improvement ahead of today’s (Friday) jobs report. That report (the “Employment Situation Report”) has the potential to move rates in either direction depending on the contents of that report and investor reaction to it. Borrowers who have been floating up to this point–not making an interest rate lock decision/agreement with the lender–should know that while there’s always a risk associated with floating, the risk increases with scheduled economic data releases like this one. Best advice if you aren’t sure–ask your lender which way he or she thinks the wind is blowing, so to speak, with rates at the moment. The numbers are very good at this point | more...

October 1, 2015

HUD 4000.1 Appraisal Requirements: Safety Hazards

By Joe Wallace

With the publication of HUD 4000.1, the new FHA Single Family Home Loan policy handbook, we’ve been addressing certain rules and regulations found in the new rules to help borrowers and lenders alike understand official policy, updates, changes, and restatements of previous regulations as published by the FHA/HUD. FHA appraisals are also affected by the new handbook. One area that contains crucial information about the appraisal process is the section of FHA appraisal rules that govern safety/environmental hazards as might be found during the appraiser’s review of a property to be purchased with an FHA mortgage. In some cases, you may notice some additional features to this section, and revised language that gives more clarity or guidance for appraisers and lenders. From HUD 4000.1 Section II Part B: “The Appraiser | more...

October 1, 2015

FHA Loan Reader Questions: Occupancy

By Bruce Reichstein

One common question many potential borrowers have about FHA mortgage loans has to do with the FHA’s occupancy requirement. One reader asked us recently, “What is the definition of Occupancy defined by FHA? Does using the space as an office suffice?” FHA single family home loans are only for residential purposes. Borrowers are permitted to use a portion of the property they buy with an FHA loan for business purposes, but the non-residential use of the property cannot exceed 25% of the total floor space of the home. FHA loan occupancy requirements state that the borrower must intend to use the home as the primary residence for at least one year. That means the borrower must move in and take possession of the property within a reasonable amount of | more...

September 30, 2015

FHA Loans For Rental Properties?

By Joe Wallace

A reader asked us a question recently about purchasing rental property with an FHA mortgage: “I’m considering cosigning on a rental property for my son so he can move in with friends. He has no credit established yet. My husband and i are also in the process of looking to move. How will cosigning affect us if we want to buy in the next 2-6 months and go with an FHA loan?” Is the reader question referring to a situation where the parent wishes to co-borrow with the child to purchase a residence for the child to occupy? Or does it refer to co-signing on a lease to help the child, with the parents later applying for an FHA loan for themselves? In the case of an FHA borrower who | more...