June 26, 2024
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 option.
Real Estate Agents
Do you understand the housing market you’re buying in? Are you confident you find the right property for you? If so you may not need the help of a real estate agent.
But not all borrowers feel that confidence, and in some cases, it may be better to get the help of a trained pro. Borrowers shopping for a home out of state may benefit more from using an agent, and likewise, if your time and resources are limited due to a busy schedule.
Plenty Of Questions
Believe it or not, some buyers will not ask the seller how old the roof is or ask the lender how many FHA loans they have experience with compared to other types of home loans.
Be sure to ask the lender about money-saving options on the loan, such as seller concessions. Also, compare lenders carefully by asking each one how much the lender’s fee is and what other expenses may apply.
Some feel intimidated asking these questions, but for some it gets easier the more they try. Being your own advocate in the home loan process is important.
A Word About The Inspection
It’s simple. Do not skip the inspection unless you want to be disappointed. Do not rely on the appraisal alone to tell you the house’s condition.
Other Important Issues
Some borrowers make wrong assumptions about FHA mortgages. Some believe it may be permitted to skip the title search, appraisal, or other standard aspects of a home loan.
Did you know a title search is required for any loan which includes title insurance? The appraisal is never optional, and you won’t be able to count payments toward items like the lender’s fee as part of your down payment
think it’s possible (at first) to skip the title search or the appraisal or that their earnest money counts as a portion of their down payment.
However, a title search is required for any loan requiring title insurance. You can’t skip an appraisal, but depending on the FHA mortgage, it may be for the property’s after-repair value (applicable for renovation and construction loans).
Things To Know About The Home Before Making An Offer
What is the average age of the houses similar to the one you are buying? How old is the home you want? New construction will have different timelines for home repair and maintenance compared to those for older properties.
Do you have concerns about replacing the roof or mechanical systems in the home? With new construction, those may be a decade or two away. For older property, that journey toward repairs may be shorter, and that’s a factor worth considering when negotiating the sale price of a home.
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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