If you are planning to finance your new home with a stable loan program, you might consider a Federal Housing Administration loan as an alternative to conventional home loan financing options. The FHA loan program allows eligible borrowers an opportunity to acquire mortgage financing with a low down payment or no down payment. The program is offered through approved FHA lenders, and the FHA insures these loans to protect lenders from losses.
U.S. Department of Housing and Urban Development
The U.S. Department of Housing and Urban Development oversees various mortgage loan programs, including FHA loans. HUD has implemented various guidelines regarding the application process, eligibility requirements and closing requirements for FHA loans.
General Closing Requirements
All parties to a specific FHA loan must sign the mortgage note and all additional closing documents, including the mortgage, deed of trust or security deed. These additional closing documents are called the security instruments, and according to FHA guidelines, individuals appearing on the mortgage loan must sign them.
Depending on state law, the non-purchasing spouse may be required to sign the security instruments if the spouse is relinquishing all rights to the property. However, a non-purchasing spouse may have an ownership interest in the property without being considered a borrower for FHA purposes. In other words, spouses can be added to the deed of trust or other security deed without being required to undergo application procedures or to sign the loan application. Although the spouse may have an ownership interest in the property, the lender continues to have a first lien on the property in question pursuant to state law.
Under the FHA streamline financing program, FHA-approved lenders may allow eligible borrowers to refinance their mortgages for the purpose of lowering their interest rates and their monthly principal amounts. Mortgage borrowers may add a spouse to the title deed when the borrower uses the FHA streamline refinancing program. The spouse is not required to undergo any loan application procedures to be added to the title.
FHA loans are designed to help individuals with less-than-stellar credit scores with the purchase of their principal residence. Many lenders are more willing to approve a variety of borrowers under this program, because their risk of losses is minimal in comparison to conventional mortgage financing. Individuals interested in applying for an FHA loan should be able to meet standard FHA credit and income requirements.
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