FHA Home Loans Refinancing

New Rules for FHA Home Loans

05.06.13

It’s no secret that FHA home loans have been a driving factor in the housing recovery because they help a wide range of borrowers with low down-payments and ensure competitive pricing from low interest rates. Last year FHA originations rose 22% to $233 billion. Since FHA defaults and delinquencies also rose last year, the Department of Housing and Urban Development and the Federal Housing Administration decided to tighten the guidelines in an effort to minimize defaults. There have been new FHA requirements incorporated that may hinder some borrowers from getting approved.

Home Loans Must be Manually Underwritten for Applicants with Poor Credit Scores
When an applicant has a credit score of less than 620, the FHA is now requiring approved FHA lenders to manually underwrite the mortgage. This means that borrowers that have are submitting a FHA house loan with bad credit‚ would have their request reviewed by an underwriter if their credit score averages came between 500 and 619. Last year applicants with fico scores below 600 could still get the home loan underwritten by the automated underwriting system.

FHA Raised Annual Mortgage Insurance Premium 
Due to the number of poor credit FHA liens insured during the housing crisis, the FHA reserves nearly evaporated. The strategy to strengthen FHA financing was laid our with higher annual mortgage insurance premiums, which went into effect April 1, 2013. Keep in mind that these mortgages are only readily available in higher cost areas of the country such as certain areas of California, Maryland and Colorado. People that have a high balance FHA mortgage should also discuss possible changes with their lender as higher insurance premiums will apply. However, the new rules do not apply streamline refinance program.

Customers with FHA Loans Can No Longer Cancel Mortgage Insurance
After June 3, 2013, customers that get a FHA home loan will no longer be able to cancel their mortgage insurance once the outstanding principle balance reaches 78% of the original balance. The new rule states that MIP cannot be removed throughout the life of the mortgage if the starting loan balance is higher than 90% of its appraised value. However, if the loan-to-value begins at 90% (or less), the borrower has 11 years to complete mortgage insurance premium payments.

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2 comments so far

Please call me about an fha home loan as I wanted to learn more about the standards and interest rates.
Thank you, David Breck

Please don’t blame the Borrower give the blame where it belongs…
Please don’t let a lender get 544.000.00 insurance played for buy the browsers when the lone is 300.000.00 and don’t make honest people be forced to pay three forced placed insurance /make lenders give accurate coasts and if they see reverse mortgage I rong and foreclosure is an option make them tell the truth if the servicers had to keep documentation on the address 1#to keep all phone calls logged with name2#that if they want certain information have a form liters/or draft of what is need/3#to have a number that you can call to email/or fax wright to and get a call back or have a number to talk to guaranteed reserving documents $3 and tell them not to lie to us /, for 26 months I tried to get documents from bank of America security one lending champion mortgage next llc , and I have been refused loan history and a copy of documents and assignments/ a choppy of singed application to FHA the contract acting of loan . my mom was very sick and a victims of predatory abuse she was misinformed told to sine blank document’s no witness no notary she changed her title and she was under water but this government backed broker she said they held one pepper she talked her into browning money to pay the fees and charges they only held pepper 4 months when she found out it was changed to b of a she was to sick and I was lied to buy B of A and champion booth they didn’t and wouldn’t follow the rules b of a wouldn’t look for my blog I am gowning to tell my story and what I have to go through to get copies for douc nets lets blame the trust company’s like the three I have had to deal with make them have a single point of contact and make them verifies documents make them stop saying they called that tried to contact that they didn’t lose documents they need more information make them play buy the rules to if ///



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