October 25, 2019
There are important FHA loan options you should know about that apply to practically any type of mortgage.
No matter if you need a single-unit loan for a typical suburban home or you want to build a house on your own lot using an FHA One-Time Close construction loan, there are options you should consider to get the most mileage out of your loan.
FHA Loan Options: Energy Efficient Add-Ons
The FHA Energy Efficient Mortgage is an option you can use to add funds for approved energy-saving upgrades to the property.
That much is more well-known than the fact that you can use this FHA loan option even if you are applying for an FHA Rehab loan which is already intended to provide funds to repair, renovate, or upgrade a house.
You can also choose to add the FHA Energy Efficient Mortgage option to most FHA refinance loans, too.
FHA Loan Options: Early Payoff
FHA loan rules require your lender to permit you to pay off the loan early without a penalty.
That penalty-free arrangement isn’t just for the final loan installment you make; it also applies when you pay more than the minimum required balance every month on your mortgage payment. You cannot be penalized for paying off your mortgage early with an FHA loan.
FHA Loan Options: Financing Certain Closing Costs
The nature and amount of the closing costs you are permitted to finance may vary depending on the type of FHA loan you choose; for example, some FHA loans permit you to finance discount points, while other types of home loans do not permit or discourage the financing of discount points.
Ask your loan officer about this option to see what is possible depending on the loan you need.
FHA Loan Options: Co-Borrowers, Second Homes
FHA loan rules allow occupying co-borrowers and non-occupying co-borrowers. The down payment requirement may be different when a non-occupying co-borrower is involved, depending on the nature of the loan and the nature of the relationship between borrower and co-borrower.
But one aspect some may not know about; if you co-borrow with another person on an FHA loan and decide you wish to apply for a mortgage to purchase a house of your own, you are permitted to do so.
It’s an exception listed in the FHA loan rules for borrowers who wish to buy a second property with an FHA loan.
That practice–buying a second home with an FHA mortgage after you have already taken out an FHA mortgage–is only permitted when there is a qualifying reason such as a change in family size or a job relocation issue that may require a new purchase.
Those who are named as non-occupying co-borrowers on another person’s FHA mortgage, and those who are vacating a jointly-owned property purchased with an FHA loan are welcome to apply for a new FHA mortgage to purchase a home of their own.
Lender standards, state law, and other variables may factor into how such transactions (any of those listed above) may be handled. Ask a loan officer for more information.
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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