July 24, 2018
Do you know how to prepare for an FHA mortgage? If you aren’t currently doing a check on your spending as part of your mortgage loan preparation stage, you may need to run some numbers on your personal finances before you commit to house hunting and an FHA mortgage application.
How To Take A Realistic Look At Your Monthly Spending Habits To Prepare For An FHA Home Loan
Consider pulling your bank statements for the last year to review your spending habits, and pay close attention to the habits you notice over the most recent three to six months.
Your financial institution may have a spending tracker for personal accounts that may help, or you may wish to invest in a personal finance app or tracking software to help you analyze the patterns you see in the previous 12 months.
You should create a monthly personal budget based on the information you get from reviewing your finances in this way, and it’s best to create one budget that reflects your current spending and another that reflects the saving you’ll need to do for your FHA mortgage loan expenses such as the down payment, property taxes, appraisal fees, etc.
Do Some Homework On The Cost Of A Home Loan In Your Chosen House Hunting Area
You will need to anticipate the expense of appraisals, compliance inspections, pest control where applicable, the lender’s fee for originating the mortgage loan, the amount of the Up Front Mortgage Insurance Premium (which will vary depending on the cost of the home and other factors) and any property taxes due on the home you are to purchase.
A mortgage lender or real estate agent in your area may be able to give you some rough estimates that can be useful for planning a budget, but for more precise numbers you would need to be making an offer on a home with a specific asking price, appraised value, etc.
The down payment aspect of this is extremely important even if you anticipate getting down payment assistance in the form of gift funds or other help from an FHA-approved source.
Don’t underestimate the need to save for a down payment, especially if you aren’t sure if your credit scores will qualify you for the lowest possible FHA home loan down payment requirement of 3.5% of the adjusted value of the home.
Compare The Amount Of Spending You Currently Have With The Amount Of Saving You Will Need To Prepare For The Mortgage
If your budget for home loan planning purposes doesn’t work out will with your current spending habits, it may be time for a rethink of your personal finances. You can get help with this from the FHA and HUD by calling the FHA directly at their toll-free number: 1-800 CALL FHA.
Request a referral to a local, HUD-approved housing counselor who can assist you with pre-purchase planning issues such as your budget, spending, and other related issues.
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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