Articles in Category: Closing Costs

February 2, 2024

FHA Home Loan Down Payments

Most home buyers will make some form of down payment, with exceptions for those using VA mortgages with no money down for qualifying servicemembers, veterans, and surviving spouses. There is also no-money-down USDA loans, but these are need-based and have income caps. By comparison, FHA mortgages, with their low 3.5% down payment requirements, are attractive to many house hunters who want to save more money upfront on the mortgage. Do You Really Have To Put 20% Down? Some borrowers may hear stories of borrowers being required to pay 20% down. This would be true in cases where the home buyer wants to avoid mortgage insurance on a conventional mortgage. And while that is not the only down payment option offered in such cases the mere idea of paying 20% down | more...

January 19, 2024

Who Qualifies For FHA Loans?

By Joe Wallace

Whether you’re interested in building a house from the ground up on your own lot or need a mobile home or condo unit, there is an FHA home loan for you. Who qualifies for these mortgages and why? FHA Loans For First-Time Home Buyers FHA mortgages are open to first-time homebuyers without perfect credit. You can apply for an FHA home loan even with past credit mistakes. The best thing to do is review your past credit and ensure your home loan application is turned in once you have a full year of on-time payments on your credit record. First-time borrowers should know an FHA mortgage, even an FHA One-Time Close construction loan is within their reach thanks to low 3.5% down payment requirements and the ability to get down | more...

November 15, 2023

When It’s Time To Close Your FHA Mortgage

By Joe Wallace

Congratulations! You selected a home to buy with an FHA mortgage, your chosen FHA lender has approved your application, and the seller accepted your offer. Getting ready for closing is the next step in that process, and many newcomers ask what happens on Closing Day? Closing day is a huge milestone for both buyers and sellers. The seller moves out and surrenders the property per your sales agreement and the borrower accepts the keys to the home. On closing day, there is an update to the deed to the home, changed to be in the buyer’s name. You will also be expected to sign all the other paperwork needed to take possession of the home. Closing day typically happens within two months of making the deal, but much depends on | more...

November 14, 2023

How Much Should You Save For A Downpayment?

By Joe Wallace

How much should you save for a down payment on a home? It’s a common question that sounds like it should have a simple answer. The lowest down payment possible for an FHA mortgage is 3.5% of the price of the home. But how much should you aim for when setting your budget to save up for that downpayment? The short answer is no. But why? FHA Loan Down Payment Issues Consider a hypothetical that involves a home on sale that you buy with an FHA mortgage. The home sells for $150 thousand, and 3.5% of that amount is $5,250. That is not how much you’ll need to pay at closing time. You’ll also need to pay closing costs, which are separate from the down payment. Closing Costs A good rule | more...

October 30, 2023

Using Downpayment Assistance With Your FHA Loan

By Joe Wallace

If you want to offset higher interest rates when buying a home, it may be worth your time to investigate your options for a local downpayment assistance program. These are offered in your state, not by the FHA or HUD. Buying a home using downpayment assistance can help you save more upfront on the mortgage but can also be an advantage because you can use the money saved for the downpayment in other areas for your new home instead. Using a DPA may also help you to hang on to more of the money you saved for the downpayment to use toward mortgage payments. It’s a smart idea to pay more than the minimum due each month. It helps you save money over the term of the mortgage. But what | more...

October 12, 2023

Optional And Mandatory FHA Home Loan Fees

By Joe Wallace

If you are new to house hunting or new to the FHA loan process and feel intimidated shopping around for a lender, realtor, or contractor, you may wonder whether certain third-party home loan services are worth the effort and expense. Borrowers need certain services like inspections and home appraisals, but for others, you may want to think a bit before committing. Realtors and Real Estate Agents Some mistakenly believe you MUST use an agent to buy a home. But what’s the reality? Hiring a realtor is 100% optional. That said, do you feel more comfortable with one instead of without? Using a realtor is not a waste of money if you are unfamiliar with the neighborhood, the city, or the state. It’s also a good move if you aren’t quite | more...

FHA Home Loans And The Biggest Credit Mistake You Can Make

September 18, 2023

No Down Payment FHA Loans?

By Bruce Reichstein

Are there no down payment FHA loans? Some borrowers feel the pinch when trying to save up for closing costs, inspections, and the required minimum investment FHA loan guidelines say are mandatory for most FHA loans. They often wonder if there is a no-downpayment option when applying for an FHA mortgage. Making a down payment is an important and mandatory part of the FHA loan process, and you won’t be allowed to sidestep this requirement. That said, there is an exception for FHA 203(h) rehabilitation mortgages, but those are reserved for victims of natural disasters in federally declared disaster areas. Why do some people mistakenly believe FHA home loans are available for no money down? Partially because they are mistaking FHA loans for the VA home loan program, which offers | more...

August 25, 2023

Are You Ready To Close Your FHA Home Loan?

By Joe Wallace

Do you know about the issues that can interfere with your closing day? It does not matter whether you were approved for a conventional, FHA, USDA, or VA mortgage. Some issues are common no matter which loan option you choose. FHA Down Payment Issues Once you have saved the money for your down payment, you are ready to close, or at least that’s what some might be tempted to think. But a key part of the closing process is knowing how that down payment must be paid. Typically you cannot use checks, credit cards, ATM cards, or cash. Borrowers must arrange a wire transfer or a cashier’s check to make the down payment. Discrepancies In Your Closing Disclosure Contact the lender immediately if you find errors or discrepancies in your | more...

June 27, 2023

FHA Loan Seller Concessions: What’s Allowed?

By Joe Wallace

When it is time to negotiate the price of a home using an FHA home loan, borrowers should know that sellers can, and often do, contribute to the buyer to make the deal more enticing or help the borrower reduce up-front costs. Such contributions are known as seller concessions. The FHA Lender’s Handbook says for FHA mortgages, concessions are permitted within a certain set of boundaries and are limited to six percent of the sales price of the home. Any seller contributions that exceed that six percent limit require a dollar-for-dollar reduction in the loan amount. According to FHA loan rules, “Sales concessions influence the price paid for real estate. For this reason, FHA requires that appraisers identify and report sales concessions and properly address and/or adjust the comparable sale | more...

May 30, 2023

FHA Home Loan Down Payment Rules in 2023

By Joe Wallace

What must you know about the down payment requirement for an FHA mortgage? FHA home loans have specific rules about the amount of your down payment and where it can come from. Knowing the down payment rules before you start saving for your home loan may make the entire process more efficient, especially if you know you’re required to give the lender the sources of your down payment money and document it accordingly. FHA Loan Rules: Down Payments Are Different From Other FHA Loan Costs Some want to know if their down payment requirement can include the money they pay toward closing costs, lender fees, or earnest money. But such costs do not count as part of your down payment amount; you must provide funds for your entire down payment | more...