January 10, 2022
If you are buying your first home, published reports say you aren’t alone. In December of 2021, a Marketwatch article noted that in 2021, the number of first-time homebuyers increased from 31% to 34%.
That information comes via the National Association of Realtors, which also notes that historically, some 40% of buyers have traditionally been first-timers.
Do you need a first home or starter home? Those who buy with FHA mortgages are in a good position to buy thanks to lower down payment requirements–only 3.5% for those who financially qualify.
Lower down payments can help in ways some don’t expect–such as having more money to pay closing costs and other expenses related to buying a home. Down payment assistance programs in your local area may be able to offset the amount you pay upfront even more–it’s smart to look into them.
Sometimes making a bigger downpayment than required can be a good move. Do you plan on keeping the home for a large portion of the loan term or the entire loan?
Making a bigger down payment may be to your advantage since it can help lower your monthly payments. Basically, the smaller your principal loan amount (thanks to a bigger down payment), the less you will pay in interest for the duration of your mortgage loan.
Ask a mortgage professional about the difference between a home appraisal and a home inspection is, and you are likely to get an earful. Ask which one is more thorough and which should be trusted as a true reflection of the home’s condition.
The answer you will get? A good mortgage professional will tell you that the appraisal is nowhere near as complete as a home inspection. Never skip the home inspection.
Some participating FHA lenders do not offer certain FHA mortgage options. FHA mobile home loans, for example, as well as some types of construction loans. Some FHA lenders may, some may not offer the type of mortgage you seek. You may need to search for a lender who can work with your needs.
FHA loans are offered for a variety of property types including condo units, mobile homes, manufactured homes, plus there are FHA rehab loans for fixer-uppers and properties that would not otherwise pass an FHA appraisal before the repair work is done.
Condo loans differ from mobile home loans, and construction loans are a bit different than rehabilitation loans. You should ask your lender about your specific needs (buying and repairing a fixer-upper, for example) and seek out the loan type most suitable for your plans.
Buying a condo unit might not require you to hire a contractor, but when building your home from the ground up, such hiring will be required.
The same is true for a typical suburban home you want to buy with an energy-efficient mortgage. You will be required to meet special conditions for such loans including using an energy consultant and selecting a contractor to install energy-saving features paid for with FHA loan proceeds.
Your lender can explain any special or unique requirements for your type of home loan–be sure to ask what your options include and how adding them may affect your home loan amount and monthly payment.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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