April 12, 2023
Do you want to buy a house with an FHA mortgage loan? Don’t forget some important steps to take long before you fill out an application (see below.)
Some borrowers don’t realize the planning stage for a home loan can be lengthy; you’ll need to save money for expenses above and beyond your down payment.
And you’ll also need to work on your credit before applying for the mortgage.
Borrowers should not consider applying for a home loan until they know three basic things-their FICO scores, how much down payment might be required on the home, and how much loan the borrower can afford.
FICO Scores: A Great Place To Start
The FICO score issue is the first one to tackle.
Your lender won’t be able to work with you without knowing what kind of credit risk you might be, and if you don’t see your credit information before the lender does, you could be in for a surprise that could slow down your quest for a new home.
FICO scores and credit history are important-borrowers need to know that their credit report is up-to-date, that there are no errors on the report, no evidence of identity theft, etc.
You should see what the lender will see BEFORE it becomes a make-or-break issue for the mortgage.
Downpayment Issues
Figuring out the amount of your down payment can be a simple as using an online mortgage calculator to estimate how much your new loan could be and taking the required minimum 3.5% down payment from that number.
Calculating the down payment means finding a home or a set of homes in your price range to see what might be acceptable, choosing a home and price for estimating, not necessarily for purchase, and running the numbers.
Once you have an idea of the down payment you need (a rough estimate), you can begin budgeting and save up for this down payment as well as closing costs, appraisal fees, home inspection fees, etc.
Figuring out how much loan you can afford is a similar process, but there are some variables to consider.
Running the Numbers
You’ll want to use an online mortgage loan calculator for this process, too.
But figuring out the estimated loan amount and estimated monthly mortgage payment requires you to come up with some additional information.
What kind? Potential interest rate, the amount of property taxes, insurance, and other things included in the monthly payment.
The online mortgage calculator can be a beneficial and useful tool, but remember that these tools provide estimates only. Your loan officer will give you more details, including a loan estimate, at the appropriate time.
Don’t assume that the mortgage calculator gives you the final say in how much the loan might be as you’ll need to work out details with the lender regarding actual interest rates, closing costs, and extras that may be included in the mortgage 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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