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FHA Loan Questions

A Federal Housing Administration (FHA) loan is usually a mortgage that is obtained by a buyer, with the help of the FHA, to purchase a home. These loans are also mostly insured against default which makes it easier for lenders as they won’t have to write off the loans if borrowers happen to default on them.

Listed below are a few questions on FHA loan-related issues.

I got an FHA loan approved and closed. The waiting period during which I had the right to cancel is also past. Do I have any rights against the FHA now that they say that the loan has not been approved?

Because your loan has been finalized, you could approach the local court and file a petition for specific performance requiring that the terms of the loan be adhered to. If a binding contract is in place, the lender would be obliged to stick to the contract terms. Hiring the services of a local attorney would help you fight your case better.

I am trying to get an FHA loan to buy a house but they require that a few repairs be done on the house before I get the loan. Do I need to mention this in the purchase agreement?

All repairs that will be carried out by the seller prior to closing should be mentioned in a separate addendum to the sales contract and should form a part of the contract between the concerned parties. In the example of a standard sales contract from California below, item 10 mentions that all repairs agreed upon need to be completed satisfactorily.

You could hire the services of a realtor or local real estate attorney to draft the addendum. You would want to make sure this is done and included at the time of the signing of the contract so that the repairs to the house are carried out.

I have closed on an FHA loan on a multi-family home. As all the units are currently being rented, how much time do I have to move into the property to meet the owner-residence requirement? How can FHA verify that I am using the property as a primary residence?

You can move in within 3-6 months after closing the loan. It is not common for FHA to investigate or rescind the loan for this reason.

To protect your interests, you could do the following:
  1. 1. Send a 30-day notice of termination to all tenants without a lease or a lease that is going to expire. Retain a copy of the notice as proof that you are waiting for the tenants to move out.
  2. 2. Change the address on your driver’s license to the new property address.
  3. 3. Start an eviction procedure against one of your tenants if you can or send them a letter offering them one month’s rent to move out so you can move your family in.

All these steps may be able to protect you in the event that the FHA feels you committed fraud.

Although almost anyone can qualify for an FHA loan, there are certain limits set on how much an individual can borrow. This is also linked to the prices of homes in the area that buyers are interested in. If you are applying for an FHA loan, you might have many questions regarding the process.
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