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FHA loans are one of the best options for young, first-time home buyers who have not had as much time to save for a large down payment or establish a high credit score.

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What to Know About the FHA Handbook


What to Know About the FHA Handbook
The FHA Handbook, officially known as the "FHA Single Family Housing Policy Handbook," is a comprehensive guidebook published by the Federal Housing Administration. It serves as a crucial resource for mortgage lenders, appraisers, underwriters, and other professionals involved in the origination and servicing of FHA-insured home loans.

The FHA Handbook outlines the policies and requirements for FHA-insured mortgages, which are popular among first-time homebuyers and borrowers with lower credit scores or smaller down payments. It provides detailed instructions and guidelines on various aspects of the FHA loan program, including eligibility criteria, underwriting standards, property appraisal requirements, and mortgage insurance.

Key components covered in the FHA Handbook include:

Eligibility Requirements
The handbook explains who is eligible for an FHA loan, including minimum credit score requirements, debt-to-income ratios, and down payment guidelines.

Property Standards
It describes the property requirements that must be met for a home to qualify for FHA financing. This includes guidelines for the condition and safety of the property.

Appraisal Guidelines
The FHA Handbook outlines the specific requirements for property appraisals, ensuring that the property's value is accurately determined.

Credit Underwriting
It provides guidance on how lenders should assess the creditworthiness of FHA loan applicants, including requirements for handling credit issues and disputes.

Mortgage Insurance
Details on FHA mortgage insurance premiums, including both upfront and annual premiums, are included.

Closing and Settlement Costs
Information on allowable and non-allowable fees and costs for the borrower, as well as the seller's contributions.

Loan Origination and Processing
Guidelines for the processing of FHA loan applications, including required documentation and borrower verification.

Servicing and Loss Mitigation
Information on loan servicing requirements and how to handle delinquencies and foreclosures.

The FHA Handbook is periodically updated to reflect changes in FHA policies and industry best practices. Lenders and other professionals involved in FHA lending are required to adhere to the guidelines outlined in the handbook to ensure that loans meet FHA standards and qualify for FHA insurance.

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FHA Loan Articles

Beyond the Break-Even With FHA Discount Points

In a previous post, we discussed why FHA borrowers should carefully consider whether paying for discount points truly serves their best interests, focusing on factors like short-term homeownership, opportunity cost, FHA mortgage insurance, and the prevailing interest rate environment. Discount points are an option for borrowers willing to pay a fee to lower the interest rate by a set amount. This is not right for all borrowers, and you don't want to pay for points you won't benefit from during the loan term.

Should You Pay Extra to Lower Your FHA Loan Interest Rate?

Are you considering buying a home with an FHA loan? You'll likely talk to your participating lender about FHA loan "discount points" – fees you pay upfront for a lower interest rate on your mortgage. The idea behind discount points is a straightforward exchange: you spend money today to reduce your interest rate. Typically, one point equals one percent of your total FHA loan. In return, your interest rate might decrease by an amount you and the lender agree upon.

Factors Increasing Your FHA Loan Costs

Home loans have various expenses that aren't apparent to a new borrower until much later in the process. What do you need to consider when making your home loan budget? It might not be complete without addressing some of the issues we cover here.

Is Waiting to Refinance Your Residential Home a Good Idea?

While the prospect of lower interest rates or more favorable loan terms can be enticing, there are situations where waiting is the better option. Refinancing without carefully considering your current financial circumstances is never a good idea, but careful planning in the current financial environment is even more important.

Getting To Yes With an FHA Mortgage

First-time home buyers worry about loan approval, but there are important steps to take to increase the likelihood that the lender will approve their application for the loan or pre-approval. What do you need to know before you choose a lender?

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