May 11, 2021

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Articles Tagged With: Mortgage Underwriting

FHA Home Loans And Interest Rates: What You Should Know About Low Rates

What Is An FHA Loan And How Does It Work?

What is an FHA loan and how does it work? There are many differences between conventional and FHA mortgages, and those differences could mean significant savings depending on your home buying needs and goals. What An FHA Loan Is Not An FHA loan is a mortgage loan, first and foremost. It is intended to buy or refinance a property. An FHA “forward mortgage” or new home loan not intended to act as a personal loan, with cash back to the borrower at closing time. FHA loan rules don’t permit the borrower to apply for a loan greater than the adjusted value of the property plus additional costs that may be rolled into the loan. While your FHA mortgage may be greater than the total adjusted value of the property, you | more...

 
Get A Free Credit Report Before Applying For An FHA Loan

What Are My Restrictions On FHA Loan Assumptions?

Restrictions on FHA loan assumptions aren’t terribly complicated, but if you are interested in assuming an FHA loan there are some things to keep in mind, starting with a requirement that the lender participates in the process. Most FHA mortgage loans closed in recent years will require the lender’s approval and participation in order to successfully assume an FHA loan. But there are other considerations, too. For example, a home purchased with an FHA mortgage on what the FHA handbook describes as “Indian Land” requires the approval of the local tribal authority. According to HUD 4000.1: “The Mortgagee cannot approve an assumption of a Mortgage secured by a Property located on an Indian Land/reservation unless the Indian Tribe has approved the assumption or sale of the rights to the Property | more...

 
Who can qualify for an FHA loan?

FHA Loans and FICO Scores: Fact and Fiction

Some potential FHA borrowers have questions about FHA loan credit score requirements. It’s easy to hear part of story when it comes to other people qualifying for an FHA mortgage and assume you’ve gotten all the facts, but the reality is that FHA loan rules and credit score requirements aren’t the whole picture. Lender standards also have a say in loan approval. That is why FHA loan rules, which specify a FICO score starting at 580 (for maximum financing), don’t have the final say. Lender standards also apply, and those standards (provided they are applied in accordance with federal law) will also factor into the application process. An FHA loan fact: FICO scores below 500 are not permitted. An FHA loan fiction: Anyone with a FICO score in the mid | more...

 

FHA Loan Reader Questions: Down Payments and Bankruptcy

We’ve gotten plenty of reader questions lately on the subjects of down payments, bankruptcy, and eligibility for FHA home loans. Here’s one: “Is there any company that will finance a small condo without a down payment. Thank you” And here’s another: “My wife and I surrendered our home thru a chapter 13. The chapter 13 was a 100% repayment plan that was successfully discharged in December of 2013…We have entered into a lease option home purchase and would like a straight answer on how long of a “waiting period” we must endure before we are able to finance a home again? We also have about $80K in sweat equity against an agreed upon purchase price of $270K. What type of down payment can we expect to need?” FHA loan rules | more...

 

FHA Loan Reader Questions: Death of a Co-Borrower

A reader asks, “What happens if your parent co-borrows the loan with you, and they pass away at some point before the loan is paid off?” This is a fairly open-ended question and the answer is just as subject to interpretation because there’s no single law or regulation that applies in such cases. The first place a borrower should look for answers in such cases is the language of the FHA loan contract–what does the contract specify if such a contingency is mentioned? FHA loan rule policies are not the first place to start looking in this case for one simple reason–state law will definitely have something to say about some part of the process. Does the borrower have inheritance issues to deal with in addition to the FHA loan | more...

 

FHA Minimum FICO Credit Score: A Reader Question

A reader asks, “I have Bankruptcy discharged June 1 2011. I do not have lots of credit. Have small inheritance from mother. I Want to purchase small house in Cleveland, Georgia. I have joined Equifax (663), TransUnion (718) and Experian (638). When I access each one has a score different than the other credit reporting agency. How can I determine my creditworthiness?” FHA loan rules say that in general, when a FICO score is available, the lender is required to use it to help determine a borrower’s creditworthiness. The credit score alone doesn’t tell the whole story–there are other factors that play a part in whether or not an FHA loan is approved–but it does play an important role The instructions for the lender on how to process credit score | more...

 

FHA Loans And Energy Efficient Mortgages

Borrowers who choose the FHA Energy Efficient Mortgage (EEM) option as part of their FHA loan can get up to $8,000 in additional funds added to the loan amount for the express purpose of adding approved energy-efficient upgrades. According to the FHA loan rules in HUD 4155.1 , Chapter Six, “Once the borrower and the property are determined eligible for FHA-insured financing, the lender, using the energy rating report and the EEM worksheet, determines the dollar amount of the cost-effective energy package that may be added to the mortgage amount. The cost of any improvement to the property that will increase the property’s energy efficiency, and that is determined to be cost effective, is eligible for financing into the mortgage.The cost that may be added to the mortgage amount is | more...

 
FHA Loan Credit Score

FHA Extends Deadline For 2014 Loan Limit Appeals

The FHA has announced an extended deadline for appeals to the 2014 FHA loan limits for high cost areas. According to an announcement dated December 20, 2013, the FHA will allow “interested parties” in high-cost areas to submit an appeal until the end of January 2014. “On December 6, 2013, the Federal Housing Administration (FHA) issued Mortgagee Letter 2013-43 which announced FHA’s loan limits for case numbers assigned on or after January 1, 2014 through December 31, 2014. FHA is extending the date for interested parties to request a change to high cost area loan limits announced in ML 2013-43 from January 6, 2014 to January 31, 2014.” However, the appeal process is not open to all high cost areas. According to the FHA/HUD announcement, “Requests for a change to | more...

 

FHA Loan Rules For Section 8 Income & Government Assistance: Reader Questions

We’ve gotten several questions lately from readers about FHA loans, government assistance and Section 8 income. What does the FHA loan rulebook say about government assistance and Section 8 income used to qualify for an FHA guaranteed home loan? When it comes to government assistance, FHA loan rules found in HUD 4155.1, Chapter Four say, “Income received from government assistance programs is acceptable for qualifying, as long as the paying agency provides documentation indicating that the income is expected to continue for at least three years.” The continuation of the income is key, so borrowers using government assistance income to qualify should be prepared to submit documentation of the income according to the lender’s requirements. Borrowers should know that FHA loan rules also address government assistance that isn’t expected to | more...

 

FHA Loans and Credit Improvement: A Reader Question

A reader asks, “I’m looking to be a first time home owner by July 2014. My credit isn’t good (607 at this time). However, I’m looking to improve my credit score significantly by June. I’m unsure where to get started in the process of getting a mortgage loan. Just need some help with the very basics in getting started.” Borrowers who need to improve their credit scores before applying for an FHA home loan need to be realistic about how long it might take to do so. It’s strongly recommended that borrowers come to the FHA loan process with at least 12 months of on-time payments for all financial obligations before applying. Why is that? The answer can be found in the FHA loan rulebook, HUD 4155.1, which has a | more...