December 20, 2023
Many Americans are considering new options for housing in 2024. The new year may be shaping up as a good time to reconsider options for home ownership. Are you ready to stop renting and start owning?
Many would-be house hunters read headlines in late 2023 about when a housing recovery will happen, the fact that the Fed decided not to raise interest rates, and talk that inflation may be slowing or stopping.
And then there are the market forces (including lower home loan rates) that are coming together to bring more potentially positive change.
What do you need to know about buying a home in the new year? For a start, the fact that tou don’t have to be a first-time home buyer to use an FHA mortgage to buy a home or build one.
Borrowers with FICO scores in the mid-600s typically qualify for FHA loans. This assumes other financials are sound, including your record of on-time payments.
You don’t have to buy for the first time and you do not have to have a financial need. That is a surprise to some borrowers who assume the FHA loan program is similar to HUD.
The HUD program includes home loans to those who qualify with income that falls within federal poverty guidelines.
FHA loans are offered to any financially qualified borrower, and that includes those who may have experienced financial trouble during the pandemic. How you recovered from that trouble is key to getting an FHA loan.
FHA mortgages can be used for a typical suburban house up to four units large. They can also be used to get a condo unit, manufactured home, or townhouse.
Did you know FHA loans can also be used to build a home from the ground up on your own land? This type of FHA loan is called a One-Time Close construction loan. We mention all this to say that you do not have to feel limited on the housing types when using an FHA mortgage/
Being pre-approved or prequalified for an FHA mortgage means getting ahead of other house hunters by getting your FHA lender to initially approve and then later formally approve your loan in a pre-qual or pre-approval process.
Some borrowers will plan on saving more money to make a downpayment in 2024. The goal? Offsetting the costs of higher mortgage payments brought on by higher interest rates. Refinancing into a lower rate could save you more over the full term of the loan, depending on when you apply, rates and terms, etc.
And that’s an issue to consider when planning to buy a home. It is a good idea for some borrowers to consider refinancing as part of a long-term strategy or loan plan to offset the early expenses of a higher interest rate.
You can make a future plan to refinance after mortgage rates fall nearer to the six percent range. It’s a smart idea to make plans to do so and to manage your finances accordingly. Your refinance loan may require a new credit check and appraisal, and you’ll want to have your finances squared away before refinancing the FHA loan.
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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