December 23, 2021
Are you one of the many house hunters planning on filling out FHA loan applications for 2022? Are you ready to apply? Here are some tips to help you determine how close you might be to the application stage of a new FHA mortgage.
Credit Reports
Do you know the contents of your credit reports? Do you know your FICO scores? If not, you’ll need some additional time before applying for your home loan to review your credit, see what the lender may see, and determine whether your credit history is free of errors or evidence of identity theft.
If your credit report shows erroneous information or if you suspect identity theft based on questionable entries on your report, you will need additional time prior to your FHA loan application to clear up the matter. It’s not advisable to apply for a new line of credit with unresolved issues on your credit report.
Payment History
It is strongly recommended to come to the application process with no fewer than 12 months of on-time payments on all your financial obligations including rent, taxes, credit cards, student loans, etc. Late or missed payments within the 12 months leading up to your loan application could make it harder for your loan officer to approve your mortgage.
FHA Loan Options
Have you decided which FHA loan options you want to use when you apply? FHA mortgages offer fixed-rate loans, adjustable-rate mortgages, and other options. If you haven’t thought about the type of loan you need or the terms (15 or 30-year loans, etc.) It’s best to have those choices carefully thought about prior to filling out the paperwork.
Some issues are optional-applying for an FHA Energy-Efficient Mortgage for additional funds in the loan to upgrade the home. Others are more critical, such as whether you’ll need to factor in hazard insurance to your mortgage payment budget depending on the location of the home you wish to buy.
Long-Term Planning
Do you think you may be in the home for five years or more after purchase? Do you see the potential for selling before the loan is paid in full? There are many types of home loan strategies that may help depending on your financial goals and needs.
Some borrowers choose an adjustable-rate mortgage to take advantage of the introductory “teaser” rate with a mind to sell the home once that rate expires or soon thereafter.
Others prefer the peace of mind that a fixed-rate mortgage brings and have no plans to sell the home once they move into it. Knowing where you’d like to be in five or ten years and the role of your new home in those plans can be a big help when it comes to deciding what kind of FHA mortgage loan to apply for.
If you are not sure about one or more of these areas, there is help available. You can call the FHA/HUD directly at their toll-free number (1-800 CALL FHA) to request a referral to a local, HUD-approved housing counselor who can help with advice and information in the form of pre-purchase counseling.
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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