Articles in Category: FHA Requirements

June 26, 2024

FHA Home Loan Planning

If you want to buy a house with an FHA mortgage, there are some simple steps to take as soon as possible in the planning and house-hunting stages. There are also a few things to avoid, as we examine below. Budget And Save Money Early Smart borrowers build in some extra funds to cover unexpected costs toward owning a new home. You likely don’t expect the appraisal to include instructions on dealing with evidence of termites or what the FHA calls “wood-destroying pests.” Some wind up paying for or negotiating with the seller to pay for an exterminator. This is just one example of unexpected costs you may need to pay on your way to owning your own home, and adding some extra money just in case is a smart | more...

June 19, 2024

Before You Buy Your First Home

By Bruce Reichstein

FHA home loans have a down payment requirement, the same as many other home loans. Earnest money is also an important early financial consideration. Planning and saving for both are part of the loan process, and you want to start as early as possible. Below, we examine some common issues related to both down payments and earnest money. What To Know Earnest Money And Down Payment Money Earnest money is paid at offer time. You do not pay earnest money at closing time. A down payment is made on closing day in addition to closing costs. Earnest money is paid into an escrow account. In the event that an FHA loan is canceled, the earnest money may be refunded to the borrower in the right circumstances, such as when the | more...

June 13, 2024

Buying A Home: How To Inspect A House

By Joe Wallace

Borrowers should always pay a licensed pro to inspect a home as a condition of buying a house. But before paying for that important service, the borrower has to look at multiple homes to find the right one to make an offer on. That process can be daunting for some first-time home buyers. What do you need to look for in a home’s physical condition to decide whether to buy? Inspecting The House In some cases you can learn by looking and researching later. When reviewing the basement, do you see cracked walls? A bit of research reveals that may be a symptom of a foundation problem, which is a serious issue. Another red flag is evidence of “excessive moisture” in the crawl space where applicable. Pooling water in the | more...

June 12, 2024

FHA Appraisals: What To Remember

By Bruce Reichstein

The FHA appraisal is one of the most important pre-closing day aspects of your home loan process. Without an appraisal, your lender can’t know if the home meets minimum basic standards for safety, remaining economic life, and serviceability. The lender also can’t make a realistic judgment about the fair market value of the home without an appraisal. What should you know about this process and how it affects you? FHA appraisals are a tool for the lender and not a tool for the borrower. You may be privy to the results of the appraisal, but that does not mean it was designed to help you as a borrower. It is not meant to tell the borrower anything actionable, especially where the condition of the home is concerned. That is the | more...

June 11, 2024

What To Ask When Buying A Home With An FHA Loan

By Joe Wallace

If you want an FHA loan to buy a home, it is always a good idea to compare lenders, real estate agents, and other service providers who serve the housing industry. When comparing, there are important questions to ask each provider to learn more about whether they are right for you. How Long Have You Worked In This Field? The answer will vary depending on the inspector, real estate agent, or lender and when doing so but there are trade-offs to consider for newcomers to the business. A more experienced lender or real estate agent likely understands more complex issues related to your home loan and can deal with them more efficiently than a “noob.” That said, newcomers aren’t always the liability you might assume they are, especially if they | more...

June 6, 2024

Home Loan Choices

By Bruce Reichstein

Every part of the home loan process has a set of choices to make. For most house hunters this process begins with the decision to own your own home and quit renting. What other choices await you on the road to homeownership? Interest Rate Options: Conventional, FHA, Fixed, Adjustable No matter which type of home loan you choose, VA, FHA, USDA, or conventional, you’ll need to decide whether to apply for a fixed or adjustable mortgage. The fixed-rate loan is good for those who need a predictable house payment for the full duration of the mortgage. Unless you refinance, the rate will not change. An adjustable-rate mortgage has an introductory period (typically at a lower rate) followed by periods of rate adjustments. FHA adjustable-rate mortgages may, for some borrowers, be | more...

Getting An FHA Mortgage After Bankruptcy

June 5, 2024

Buying Older Real Estate With An FHA Mortgage

By Joe Wallace

Interested in buying an old house? A fixer-upper? Does the house you fell in love with need extensive repairs to make it worth owning? FHA loans include options for older homes and fixer-uppers. We cover some key points below. FHA Loan Options Are More Flexible Than You Might Think There’s no single FHA mortgage option. You can’t use one loan to buy any property type that is allowed. There are just too many different options and needs that must be taken into account in the housing market. Want to build a home from the ground up? There’s an One-Time Close FHA construction loan for that. Want to buy an old property and rework it into a newly renovated home? There are FHA loan options for that choice, too. If you find | more...

June 4, 2024

What To Consider As You Plan Your FHA Mortgage

By Joe Wallace

Are you a new borrower with questions about how the FHA loan process works? There are important details to learn and remember to get along the way to get the most out of your FHA mortgage. Borrowing Limits For FHA Mortgages For FHA loans, HUD 4000.1 says 31% is the highest number for typical FHA mortgages without an Energy Efficient Mortgage add-on. Those loans can technically go higher. FHA loan amounts are typically guided by the appraised value of the home and the FHA loan limit for your area, among other factors. It’s possible to be approved for an FHA loan for up to 96.5% of the home’s sale price. That means your downpayment is 3.5%, which is comparatively low. But should you pay only the minimum? Borrowers interested in | more...

June 3, 2024

FHA Home Loan Credit Score Requirements: FICO Scores And More

By Joe Wallace

Many borrowers worry about their credit scores ahead of an application for an FHA home loan, and it’s hard for some to gauge whether they have sufficient credit to get a loan approved. FHA loans have more forgiving credit requirements, and borrowers should not assume they do not qualify for a home loan without discussing their circumstances with a participating lender. When is a low credit score too low? FHA home loan rules specify that the lender must ensure a 500 FICO score (the very minimum) to qualify for an FHA mortgage, but your credit score numbers don’t tell the whole story. Lender Requirements For Home Loan Approval Vary You may read that FHA loan rule minimums for FICO scores do not always reflect the participating lender’s credit score requirements–this | more...

May 30, 2024

Before You Reach Closing Day

By Joe Wallace

Once your home loan application is approved, is a borrower really home free on the way to closing day? Is the loan application a done deal once approved? Not quite, and that’s a factor some new borrowers should keep in mind at all times. Never assume the deal is done until the keys are in your hand. Why do we say this? There are important reasons which we explore below. Damage To The Property The house you want to buy with an FHA loan may be in great condition when you make an offer to the seller. But what happens if the house experiences a major disaster, fire, or even an accident? If your loan has not yet closed, you and the lender must determine whether the sale can happen. | more...