Why would anyone want an FHA mortgage?

mortgageporter-thinkingLet me start by saying there’s nothing wrong with having an FHA insured mortgage. FHA mortgages have been a resource for first time home buyers and borrowers who lack significant down payment since their inception 40 years ago…. BUT with the increases to the upfront and monthly mortgage insurance premiums and the reduced loan limits, many borrowers could be better off considering loans other than FHA.

When I’m working with a home buyer who’s considering an FHA mortgage, here are some of the other mortgage programs I suggest they consider:

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2014 FHA Loan Limits Reduced in Washington State

Last week, HUD announced the FHA loan limits for 2014 with most counties in Washington having loan limits reduced from 2013 levels. In the Seattle/King County area, FHA loan amounts for a single unit dwelling will be reduced by $61,500 from $567,500 to $506,000 in 2014. Kitsap County was hit the hardest with a reduction of $167,950 for single unit dwellings. The higher loan limits that we have appreciated over the past few years were intended to be “temporary” and HUD has been attempting to shrink FHA’s footprint, so we shouldn’t be too surprised over the lower loan limits.

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2014 FHA Loan Limits for Washington State

FHA loan limits for 2014 have been reduced from 2013. For a home located in greater Seattle, the new FHA loan limit is reduced from $567,500 to $506,000 in 2014. The reductions are across the board for Washington state counties and some loan limits are below 2014 conforming loan limits.

FHA streamline refinances without appraisals and with loan amounts over the the 2014 loan limits will not be subject to the new loan limits.

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Seattle Real Estate Chat: FHA’s Back to Work

In this week’s episode of Seattle Real Estate Chat we discuss FHA’s “Back to Work”. Back to Work is a newer extenuating circumstance that allows people who had a short sale or foreclosure to be able to buy again as long as the short sale or foreclosure happened because of a loss of income at no fault of their own (due to actions by their employer). You can read more about FHA’s Back to work program here.

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Can You Get an FHA Mortgage during the Government Shutdown?

The simple answer to that question is YES!  HUD drafted a 67 page contingency plan in the event of a government shutdown. The HUD 2013 Contingency Plan Draft 9/25/2013 states the Office of Single Family Housing will:

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Reader question: What can we do during the waiting period?

MortgagePorterHourGlassHouseIf you’ve had a bankruptcy, short sale or foreclosure, there is a waiting period that must take place before you can start the mortgage process. Wait periods vary depending on the type of derogatory event and the mortgage program. This reader’s excellent question is from an article I recently wrote about FHA’s “Back to Work” program.

We will reach our 1 year mark on January 30. Can we do anything before then to get the process started or do we have to wait until January 31?

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FHA “Back to Work” is available at Mortgage Master Service Corporation

I’m pleased to inform you that I just received a memo from our management stating that we are accepting HUD”s guidelines for the “Back to Work” program.

HUD’s “Back to Work” guidelines allow people who had a foreclosure, short sale or deed in lieu of foreclosure because of a significant loss of income and/or employment during the recession, to buy a home again quicker than the standard wait period of three years (for FHA).

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FHA unveils “Back to Work” Guidelines for those who had a Short Sale or Foreclosure

UPDATE Sept 9, 2013: I just received a memo from our management and we are doing FHA’s “Back to Work” program for home buyers who meet the criteria.

HUD released Mortgagee Letter 2013-26, also referred to as “Back to Work” featuring enhanced guidelines for home owners who lost their homes via short sale or foreclosure due to financial difficulties. “Back to Work” shortens the required wait periods for borrowers wanting to buy a home again.  From ML 2013-26:

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