Articles Tagged With: First-time Home Buyer

September 19, 2022

Which Is Better: Conventional Mortgages Or FHA Home Loans?

Which is better, a conventional mortgage or an FHA home loan? If you are struggling to make this choice, rising interest rates and home ownership costs might make you look twice at your upfront costs and other expenses associated with each type of mortgage loan. The more forgiving credit requirements and down payment expectations of an FHA mortgage may have you thinking twice about going conventional. When it comes to FICO scores, FHA loans on paper are easier to be approved for than conventional home loans. And while a conventional mortgage could be more affordable over the lifetime of the mortgage, those who need more flexible credit requirements and lower upfront costs may find the FHA mortgage worth considering. There are a few objections to FHA loans. Some are less | more...

September 9, 2022

Article Update: FHA Appraisal Refunds

By Joe Wallace

Back in 2012, we wrote an article discussing the FHA appraisal process, and whether it’s possible to get a refund from an appraiser if a property is not approved for an FHA mortgage or when the home’s appraised value comes back different than expected. When we addressed this question, which we are asked from time to time, the going advice was that in cases where a buyer disagrees with the outcome of the appraisal, the fee must still be paid. What’s the reality in 2022? When you find a house you want to buy with an FHA home loan, there must be an appraisal. This process is non-negotiable; the appraisal helps to determine the FHA loan amount which is based on the fair market value of the home, not necessarily | more...

August 31, 2022

Before You Fill Out FHA Home Loan Forms

By Joe Wallace

Are you ready to apply for an FHA mortgage? You’ll want to make sure you have done a few important preliminary steps before you submit an application. The most basic thing to start with is knowing what type of home loan you need. If you plan to buy a condo unit your FHA loan will be a different variety than if you need to buy a manufactured home, for example. That may sound like some of the most basic home loan advice out there, but what is not so basic is knowing that there are nuances for some of these loans you need to know. A condo unit must typically be part of a project that is on or added to the approved list for FHA loans. But did you | more...

When Is An FHA Loan Better Than A Conventional Loan?

August 26, 2022

FHA Loans And Community Property States

By Joe Wallace

One of the most common questions we are asked about FHA mortgages involves state community property laws, non-borrowing spouses, and their credit issues. Does an FHA loan applicant have to include a non-borrowing spouse’s financial data when applying for an FHA mortgage? It all depends on whether the state the borrower is living in has community property laws or not. In cases where such laws are present, the transaction may be affected. FHA loan rules on this topic are addressed in HUD 4000.1, starting on page 180. It begins with a definition: “Non-Borrowing Spouse Debt refers to debts owed by a spouse that are not owed by, or in the name of the Borrower.” In cases where a borrower lives in a community property state, where state law has a | more...

August 19, 2022

What You Cannot Do With Your FHA Home Loan Money

By Joe Wallace

Some new borrowers have misconceptions about home loans in general; they may think that FHA mortgages are for first-time buyers only, they may assume you have to make a 20% down payment, and they may also hope to apply for more home loan than they need to make the purchase with the idea of taking the excess in cash. If you make plans for a home loan based on some of those assumptions, you may be in for a surprise. FHA loans do not require you to be a first-time home buyer, you do not have to make a 20% down payment, and you generally cannot take cash at closing time except for refunds. When you apply for an FHA home loan, that application will be for a loan amount | more...

August 17, 2022

FHA Loans And Surplus Land

By Joe Wallace

What do FHA loan rules say about surplus and/or excess land? It’s not an issue for someone who wants to buy a condo unit, but for those looking for homes in rural areas, excess or surplus land could be an important detail at appraisal time. FHA loan rules in HUD 4000.1 discuss appraisals where there may be surplus land or excess land involved, and while the section referencing this issue is short, it does give us an idea of what to expect in these cases; a big question addressed in FHA loan rules here is how the excess or surplus land affects the valuation of the property. What Is The FHA Definition Of Surplus or Excess Land? HUD 4000.1 states, “Excess Land refers to land that is not needed to | more...

August 15, 2022

Assuming An FHA Mortgage: Article Update

By Joe Wallace

Can I assume an FHA mortgage? That is a question we addressed in a 2021 article about FHA mortgages, and it’s an important question on the minds of those looking to take over an FHA home loan from the original borrower. The process of getting a loan assumptions are a bit different than a new purchase home loan application, but under FHA home loan rules, the borrower must be able to afford the loan in both cases. The lender’s job in part has to do with determining whether the borrower is a good risk. The short answer to the original question? Yes, in most cases, assuming there is lender participation, you may be able to assume an existing FHA home loan from the original borrower. You will NOT be able | more...

August 8, 2022

What To Ask About FHA Refinance Loans

By Bruce Reichstein

Getting ready to refinance? Even if you are considering using the same lender that you got your mortgage from originally, there are some important questions to ask your loan officer about the refinance transaction. Do you know how much your loan will cost? Do you understand the differences between a simple refinance, an FHA Streamline refi loan, and other types of mortgages? Find out more today and get ready to find the best deal for your needs. FHA Refinance Loan Questions: How Much Will My Loan Cost? In the earliest stages of the refinance loan process, don’t expect to get exact figures, but do ask your loan officer for estimates based on the typical set of costs for the refinance loan you need. You may not be charged identical costs | more...

August 5, 2022

FHA 203(k) Rehabilitation Mortgages Compared To FHA One-Time Close Mortgages

By Joe Wallace

Some borrowers want to know if there are any differences between a one-time close construction loan and an FHA 203(k) Rehabilitation Loan. While both of these loans have some features in common, the short answer is that they are not interchangeable and each loan has a specific purpose. Both types have one loan application and a sinlge loan closing date. Rehab loans and construction loans both use escrow to facilitate the payment of loan funds to contractors, and participating lenders may require the borrower to typically credit-qualify with FICO scores typically in the mid-600s for either type of mortgage. FHA 203(k) Rehabilitation Mortgages are offered as either a refinance or a purchase loan. An FHA One-Time Close construction loan is a forward mortgage. You would want to use an FHA | more...

August 1, 2022

Article Update: FHA Appraisal Rules On Peeling Paint

By Joe Wallace

In 2019 we wrote an article discussing a common reader question about FHA home loans. Can the presence of peeling paint be enough to cause a problem in the FHA appraisal process? In our original article, we noted that this can be a major issue for homes built before the lead paint ban which took effect in the 1970s. In some situations, borrowers want to know why the appraiser reviewed the home and required a correction of a peeling paint issue as a condition of loan approval. The age of the home plays a big part in that decision to require a correction. If the house was built before 1978, that peeling paint is NOT just a cosmetic issue. FHA home loan rules since our original article in 2019 still | more...