June 9, 2016
Do you have questions about FHA home loans? We get many requests for information in the comments section of this blog, and a good number of those questions are frequently asked, indicating the need to have more discussions on such topics. Buying a home may seem intimidating at first, but there is a process involved that follows certain basic steps towards completion. Let’s examine some of them:
How do I start planning for an FHA home loan?
The key to getting ready for an FHA loan application is to give yourself time. It’s recommended that potential home loan applicants start getting ready at least 12 months before actually filling out an application, and there are several good reasons for that. One is that it takes time to check and verify your credit reports with the three major credit reporting agencies.
Another is that you’ll need time to budget and save money for a down payment, closing costs, inspections, etc. You can get help in the planning stage by contact the FHA directly at their toll-free number (1-800 CALL FHA). Ask for a referral to a local, HUD-approved housing counselor who can help you in pre-purchase planning stage of your loan.
How much should I save for my down payment?
The answer to this question depends on a number of variables including the price of the home. You can use an online mortgage calculator to help estimate this amount and start saving up towards it.
Are there other expenses I should be saving up for?
Yes. There are appraisal fees, closing costs, discount points, and compliance inspection fees (where applicable) that will be part of your closing costs. Depending on the nature of your transaction the lender may permit certain fees to be included in the loan amount-this is true of discount points on some types of FHA refinance loans, for example. You will need to discuss which expenses can be included in your loan amount and how adding them might adjust your monthly mortgage payment.
How long should I give myself to check and verify the information on my credit report before applying for a home loan?
The simple answer is, “as much time as possible”. If you find information on your reports that is not accurate it may take additional time to clear that up. The best approach is to assume this aspect of the home loan process will be one of the most time consuming, and prioritize it accordingly. If your report show no inaccuracies or problems, you’ll have gotten one of the biggest steps out of the way in the earliest stages of your planning process, leaving you free to concentrate on the other areas you need to work on.
What other paperwork will my lender ask of me?
You may be required to furnish tax records, pay stubs, proof of income, etc. Lenders will need additional documentation for relevant legal issues such as a pending divorce, existing divorce or child support agreements (where the borrower chooses to have child support included as income). If the borrower is self employed, profit and loss statements may be required. Assume that any income you wish to have included in your debt to income ratio will need to be reviewed by the lender and get your documents together to help the lender verify it.
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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