January 28, 2022
Are you considering an FHA mortgage as a first-time homebuyer? There are some important things to remember that can help make your home loan journey better. Consider what follows as things to consider adding to your home loan planning checklist.
Monitoring your credit is the first step.
If you have not started the planning stages of your home loan yet or are in the earliest stages of that, you’re in a great place to start monitoring and working on your credit. If you are farther along in the process and have not started monitoring your credit, do so as soon as you can for best results.
Saving money for your home loan expenses is an important part of the planning phase of your mortgage. You should research real estate blogs and lender websites to learn what expenses to anticipate, but in general be ready for appraisal fees, application fees, the home inspection fee, termite inspections, and more.
The type of loan and the options you seek will be important in this saving money stage. Do you know if you want to pay your closing costs upfront or finance some of them into the loan? You will want to know how much to expect to pay in cash and how adding costs to your mortgage will change the amount of your monthly payment.
Here’s an expense associated with buying and owning a home you should anticipate well in advance–property taxes. How soon until you have to pay them and what should you expect from those taxes?
When you start working on your finances ahead of your home loan, remember three things. The first is that you won’t be able to use credit card cash advances or other non-collateralized loans to pay for things like the FHA loan downpayment.
That is not a resource open to you, don’t plan on using such funding options.
The second is that your lender will not only review the number of credit accounts you have but also their age. Don’t give in to the temptation to close a credit account completely.
Believe it or not that might negatively affect your credit scores. Keep the account but don’t use it.
The third thing to remember is that it is best to avoid any major changes in your finances once you have started the application process.
If you switch careers, make a job transition that might be viewed as something less than a promotion, or change employment status from full-time to being a contractor, for example, that can potentially change the game when it comes to home loan approval.
The best thing to do when preparing for any major line of credit is to think in terms of how the lender must deal with your financial information. Learn to think like a lender. Anticipate the lender’s need to justify approving your home loan and you’ll get a lot closer to understanding the best practices needed to prepare for the loan application.
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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