Red Flags of the FHA 203k Renovation Loan

Fixer-upper homes, foreclosures, short-sales and REO properties have flooded many housing markets across the country. This can be a great thing for home buyers looking for good deals. Unfortunately it also means a lot of housing stock is in need of some TLC. From simple upgrades and improvements to renovations and repairs, many homes need work. Fortunately there's a mortgage loan program that takes aim squarely at these less-than-desirable houses, and turns them into dream homes!

You may have never heard of the loan program backed by the Department of Housing and Urban Development (HUD) called the FHA 203k loan. The 203k hasn't seen much press since its inception in the late 1970's. Since then, lenders have been able to partner with state and local housing agencies, as well as nonprofit organizations to rehabilitate properties. Despite this great move, the 203k remains largely in the shadows. Some of the reason would be a stigma attached to the FHA 203k that it's a difficult loan to deal with. But that doesn't have to be the case. The Standard 203k from the 70's can have issues with difficulty or timing, but an experienced mortgage advisor should be well-equipped to handle this loan program.

Also, the 203k Streamline was added to the program a few years ago. Now home buyers have another option to finance home improvements, repairs, renovations, or rehabilitation.The basic difference between the Full and Streamline loans is the money you can roll into the mortgage (the Streamline covers up to $35,000) and the kind of work that's covered (the Full will cover structural repairs). So whether it's new paint, carpet, siding, appliances or windows that you want to replace, or it's something that you need to replace because it's a structural issue, the FHA 203k can help by rolling the cost into the mortgage.read more>>>

FHA Loan Modification Program

Even though the Department of Housing and Urban Development (HUD) is rendering extensive attempts to encourage the Federal Housing Authority (FHA) home loan modification plan sponsored by the government, many borrowers are still not knowledgeable about the plan. They do not understand how useful it would be in adjusting their existing mortgage. The FHA program features can help you customize your existing house loan, and make it less expensive to buy back. The primary target of the FHA loan modification program, also called the "Hope for Homeowners Program" is to aid the homeowners who have financial difficulties in paying their mortgages. The FHA modification aids troubled homeowners on the brink of losing their residences to prevent property foreclosures and keep their property.

Prior to obtaining the FHA loan modification plan, it's necessary for the borrower to completely comprehend the terms and conditions involving the policies of the program. The federal government has issued FHA loan modification eligibility qualification, and it's a need that the applicant be eligible as per their guidelines. As per the FHA modification specifications instruction laid down by the federal government, the client has to fulfil the terms and conditions as stated by the FHA, as well as submit certain documents to become eligible for amendment.

The following documents are: Adversity correspondence. The hardship letter must effectively express your existing financial issues that describe you are extremely experiencing difficulties and it is difficult to settle your current mortgage. The notice should be straightforward, properly written, honest, and self explanatory because this will stand for your case; the individual is the property owner and a tenant of the home; the candidate should be able to pay for a down payment of approximately 3.5 percent of the offered loan amount; bank account transactions; confirmation of monthly salary (pay stubs and pay slips); and credit history.readmore

FHA Mortgage Broker Training - 5 Tips To Make Sure Your FHA Loans Get Approved And Close On Time

Here are five quick tips loan originators can use to help prevent FHA mortgages from falling through during processing. For some mortgage originators these tips will seem ridiculously basic. Unfortunately, conversations with FHA underwriters show me that many loan officers haven't caught on to these ideas yet.

1. Make sure the loan you are submitting makes common sense.

Incredibly, this is one of the most common mistakes made by originators who entered the mortgage business within the last 5 to 7 years. Subprime programs generally only required that the loan fit into their matrix and never cared about the reasons the person had credit problems. Make sure that you can verbalize a good case that it makes sense to believe that this borrower can reasonably be expected to make the payments on the loan. Often this requires asking a lot of uncomfortable questions of the borrower to make sure that you truly understand their situation. Even when your submission is approved by the automated underwriting system and theoretically the underwriter needs only to validate the information and does not need to make a credit decision, the underwriter may well find something wrong if the loan does not make common sense. Lenders are held accountable by HUD for loans that default. They can always find a reason to override the automated underwriting findings if they want to.read maore

Stating a good case for loan approval is even more important when the FHA Total Scorecard underwriting system has referred your loan to an underwriter to make the decision. Do not ever assume that just because the debt to income ratios meet guidelines and the borrower hasn't been late on any payments in the last 12 months that you don't need to submit a well constructed cover letter with your loan - in addition to the borrower's own credit explanation. Make sure that both your cover letter and the borrower's explanation fully account for what happened to cause the borrower to have credit problems and why the underwriter should now believe that the borrower has solved the problem.