Articles Tagged With: FHA Loans

May 30, 2019

FHA Loan Rules: Adding Repairs To The Sale Price Of The Home

FHA loan rules for new purchase home loans include regulations on how the cost of repairs can be added to the sale price of the home to be purchased with an FHA mortgage. Th rules for this are found in HUD 4155.1, Chapter 2 Section Five, which states: “Repairs and improvements may be added to the sales price before calculating the mortgage amount when the • repairs and improvements are required by the appraiser as essential for property eligibility, and paid by the borrower, and • sales contract or addendum identifies the borrower as responsible for payment, and completion of the repairs.” FHA loan rules in this section state that, “Only repairs and improvements required by the appraiser may be included.” How does this all work? Chapter Five has a | more...

Do you know how to protect your credit score during the COVID-19 outbreak? Millions of Americans have suffered economic setbacks as a result of containment measures designed to stop the spread of the virus, and many of them were already struggling with credit issues prior to the outbreak. How can you protect your credit going forward? The first step is to know what your credit report says and to actively monitor your credit. In some cases, credit problems wind up being the result of factors beyond the consumer including: Inaccurate credit report data Outdated credit information that needs to be removed Evidence of identity theft Credit report information that is accurate, but for someone else with the same name Any of these issues can hurt your credit, and they take time to correct. But they ARE correctable. Here is what you need to know about protecting your credit during and after COVID-19: You should NEVER pay a third party who offers to remove accurate negative credit reporting data from your credit report. No one can do this, it is not legal to claim you can remove ACCURATE negative credit data. You can pay a reputable third party to help you MONITOR your credit with updates and alerts that can actually help you manage your file. Pay on time, every time. Every missed payment can hurt your credit. If you cannot pay on time, contact your creditors to let them know and make arrangements. If you do not contact your creditors to make arrangements, you risk negative credit consequences that can hurt your ability to be approved for credit at multiple levels, not just major purchases. Contacting your creditors to make payment arrangements and avoid negative credit reporting is very important. Remember that late and missed housing payments (mortgage, rent, etc) reflect badly on your credit score in the best of times; if you don’t contact your landlord or mortgage servicer to make arrangements, you do not have protection against credit score damage as a result. Communication with your creditors is time consuming and, let’s face it, a bit laborious. But the protection you give yourself is definitely worth the effort. Don’t let the challenge of these tasks prevent you from getting the most protection possible for your FICO scores and credit report.

February 26, 2019

First-Time Home Buyer Tips

By Bruce Reichstein

What does a first-time home buyer need to know when searching for real estate to buy with an FHA mortgage? It’s good to make a checklist before you start and add to it along the way-there are some important things to do before you ever fill out home loan paperwork. Decide If You Are Going To Use A Real Estate Agent Whether you buy your home with an FHA mortgage or not, this is a choice that could make a difference in terms of saving time looking for just the right home. If you choose to use the services of a real estate agent, be sure to include a list of features you want in your home and features you do not want-the agent will help you narrow the field. | more...

December 6, 2017

FHA Loan Rules For Income Verification: Part-Time Employment Income

By Joe Wallace

Is it possible to be approved for an FHA home loan using part-time employment income? There are indeed FHA loan rules for this type of income and instructions to the lender for how it is to be reviewed. HUD 4000.1, the FHA home loan handbook, states that all verifiable income must meet certain FHA minimum requirements including the ability to verify two years of employment (not necessarily with the same employer). One area some borrowers may be concerned with in this area is part-time income. Does the FHA allow a lender to verify and count as income the earnings from a part-time job? The rules for this are found on page 200 of HUD 4000.1, which begins by defining what the FHA considers part-time income: “Part-Time Employment refers to employment | more...

December 5, 2017

FHA Loans And Charge-Off Accounts

By Joe Wallace

Do you ever wonder about applying for an FHA Loan while having charge-off accounts in your credit history? Is it possible to get approved for an FHA home loan even though you have some negative credit information in your background? This is a question many ask, and the answer can be complicated depending on how old that negative credit data is, and whether or not it indicates an overall pattern of credit behavior. When you fill out an FHA loan application, your loan officer will need to examine your credit history, FICO scores, and other areas to determine your credit worthiness. Some borrowers come to the loan process with outstanding credit, others may have old issues or even currently disputed items on their credit reports that make them worry about | more...

FHA Loan Interest Rates: How Low Can They Go?

December 4, 2017

FHA Home Loan Rules For Salary, Hourly, Part-Time Income

By Joe Wallace

Not every home loan applicant has the same type of employment, compensation, or schedule of compensation. That’s why FHA home loan rules in HUD 4000.1, the FHA single family home loan handbook, include different instructions to the lender for a diverse range of income sources. FHA Loan Rules For “Primary Income” HUD 4000.1 has sections for hourly income, salary, and part-time income. The section that includes these guidelines states that the lender is responsible for examining earnings from the home loan applicant’s “primary employment” and defines it as follows: “Primary Employment is the Borrowers principal employment, unless the income falls within a specific category identified below. Primary employment is generally full-time employment and may be either salaried or hourly.” “Current Pay” Versus “Projected Pay” According to HUD 4000.1, FHA loan | more...

November 28, 2017

Is A Property Eligible for an FHA Mortgage Loan If It Has Asbestos?

By Bruce Reichstein

Borrowers interested in purchasing older properties using an FHA insured mortgage could face several challenges depending on the nature of the property. For example, some buildings insulated or otherwise constructed with asbestos products could pose a health hazard. FHA rules include minimum property requirements for safety, which address situations like these. Is a property eligible for an FHA loan if it has asbestos in it?

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...

Did The FHA Raise FICO Score Requirements For Single-Family Home Loans?

September 28, 2017

Can I Get a Single Family FHA Loan For A Multi-Unit Home?

By Joe Wallace

Can I get an FHA single family loan for a multi-unit home? Some borrowers get confused by the wording in the name of the FHA Single Family Home Loan program. It’s easy to assume that FHA single family mortgages are for one-bedroom houses, but that is definitely not the case. FHA loans are approved for homes that feature as many as four living units-a four unit property can definitely be financed with an FHA loan assuming the borrower is qualified to be approved for the mortgage. One-to-four unit properties purchased with FHA mortgages must be the primary residence of the borrower-you must agree to occupy the home purchased with an FHA mortgage loan usually within approximately two months after loan closing (unless the borrower makes other arrangements with the lender | more...

Will I Need To Fill Out IRS Form 4506-T To Buy A Home With An FHA Loan?

September 11, 2017

Can I Use A Power Of Attorney At FHA Loan Closing Time?

By Bruce Reichstein

Can I use a power of attorney when it comes time to close my FHA loan? That may not be a common question per se, but for those this issue affects, the answer can affect how the entire closing process is handled. There are many reasons why a power of attorney might be needed to close a legally binding financial transaction such as an FHA mortgage. A borrower may be called away for an urgent work or family need, military duty could prevent the borrower from being physically present, injury or illness, etc. FHA loan rules address the power of attorney issue in HUD 4000.1, which begins on page 345 by stating: “A Borrower may designate an attorney-in-fact to use a Power of Attorney (POA) to sign documents on their | more...

FHA Loan Rules: Using Rental Income to Qualify for a Mortgage Loan

August 17, 2017

What Kind Of Home Can I Buy With An FHA Mortgage?

By Joe Wallace

What kind of home can you buy with an FHA mortgage? The answer isn’t what some people expect, likely due to a misunderstanding of the FHA loan program, who it is intended for, and why it exists. A good example of this? The assumption that FHA mortgages are primarily for first-time home buyers or the economically disadvantaged. Such assumptions are not true. FHA loans are for any financially qualified applicant, which means you don’t have an income threshold to meet, there are no restrictions on those who have purchased homes before, and there is no income maximum. What kind of home can you purchase with an FHA mortgage? FHA loans permit the purchase of homes which are primarily residential, have no restrictions of resale, and which meet FHA minimum standards | more...