June 13, 2016
Many borrowers feel intimidated by the home buying process. Are you unsure about credit score issues, pre-purchase budget issues, down payment requirements, or appraisal rules? It’s easy to understand why; buying a home is a major investment and it’s definitely a step worth taking the time to research and save up for properly.
Why does it take a year or better to get prepared for the home loan application? What are the basic credit score requirements for an FHA mortgage? Can I refinance my home at some point with a cash-out loan? These are all important questions.
There are other commonly asked questions, too. Many involve dollar amounts for down payments, appraisal fees, or other loan expenses. We get asked these questions frequently in the comments section, but unfortunately there’s no easy answer.
Down payments, for example, are based on the appraised value of the home or the asking price, depending on which amount is higher. Appraisal fees, compliance inspection fees, and other loan expenses may vary depending on a variety of factors including what is considered typical in the housing market you’re purchasing in.
With such details to figure out, where is a potential FHA borrower to turn in order to start preparing for the home loan application?
For answers about down payments, estimated monthly mortgage payment amounts, and related issues, it can be very helpful to use an online mortgage calculator, which can provide these estimates (including a rough idea of how much loan you can afford to take out based on your current monthly pay, monthly debt, and other basic financial details).
If you are concerned about how to interpret your FICO scores or credit report, you can get some good advice from the Consumer Financial Protection Bureau, which is a government agency that helps consumers become more financially literate. You can get specific information about FICO scores with this downloadable PDF from that agency: http://files.consumerfinance.gov/f/201209_Analysis_Differences_Consumer_Credit.pdf
And then there is the housing counseling option offered by the FHA and HUD. All that’s needed is to call them directly at 1-800 CALL FHA and request a referral to a local, HUD-approved housing counselor or agency that can provide pre-purchase advice and information.
An informed borrower is much happier with the results of their home loan application experience, and getting the help of a housing counselor long before you fill out any loan paperwork will definitely help you to borrow more confidently.
Do you work in residential real estate? You should know about the free tool offered by FHA.com. It is designed especially for real estate websites; a widget that displays FHA loan limits for the counties serviced by those sites. It is simple to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today:
http://www.fha.com/fha_loan_limits_widget
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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