Articles Tagged With: First-time Home Buyer

August 27, 2024

FHA Loans Versus VA Home Loans: Who Wins?

Some borrowers qualify for VA loans. Others qualify for FHA mortgages. Some may have the option to apply for both. What do you need to know about FHA and VA home loans besides the fact that they are both government programs designed to help borrowers find affordable houses? We examine the differences and similarities below. What To Know About VA Loans VA loans, guaranteed by the U.S. Department of Veterans Affairs, are exclusively for those with uniformed service, including veterans, active-duty service members, and certain surviving spouses. These loans are popular among the military community for the no down payment option, competitive interest rates, and more forgiving credit requirements. Eligibility for VA loans is based on military service. Individuals must meet specific service requirements outlined by the VA. Generally, veterans, | more...

August 26, 2024

How Much Should I Put Down On A House?

By Joe Wallace

Thinking about getting pre-qualified or pre-approved for a mortgage loan? FHA mortgages generally require a lower down payment and have more forgiving terms for loan approval, but the amount of money you put down isn’t just guided by your financial qualifications (see below). It also depends on your financial goals. Some sources indicate that more people put down less money than you might think to purchase their dream home. Some zero-money-down transactions are likely either VA loans (available for qualified veterans and dependent on serving a minimum amount of time in uniform) or USDA loans, which also have a zero-down payment option. But in some cases, you may actually wish to make a larger down payment. Why? In some cases it’s because a borrower’s FICO scores aren’t high enough to | more...

August 23, 2024

What To Know About Credit Before You Apply For An FHA Mortgage

By Joe Wallace

Credit history and FICO scores will be key factors when your FHA lender reviews your home loan application. For first-time homebuyers, the path to owning a home can be complicated early by credit problems, and knowing to avoid some common credit pitfalls is key. We examine some of the major points below. Prioritize Your Credit Report FHA lenders will review your credit reports from the three major credit bureaus to assess your creditworthiness and determine your interest rate for the FHA mortgage. New homebuyers must regularly monitor credit scores and reports for evidence of problems, errors, and identity theft. These, even if not your fault, can reduce your credit score and jeopardize loan approval. Start by requesting free copies of your reports from the official website, AnnualCreditReport.com, and review those | more...

August 22, 2024

Comparing FHA Mortgage Insurance to Conventional Mortgage Insurance

By Joe Wallace

There are two types of mortgage insurance: private mortgage insurance (PMI) and Federal Housing Administration (FHA) mortgage insurance. Each has a specific use and purpose and its own price tag, which may vary depending on circumstances. We examine some important facts about each type below. What To Know About Mortgage Insurance Private Mortgage Insurance (PMI) PMI protects lenders if a borrower defaults on a loan with less than a 20% down payment. Lenders consider this insurance necessary for loans that are viewed as higher risk. PMI typically has stricter eligibility criteria than FHA mortgage insurance. Borrowers often need good credit scores (680 or higher) and a debt-to-income ratio of 43%. The cost varies depending on the borrower’s credit score, down payment amount, loan term, and the insurance provider. It is | more...

August 20, 2024

A Look At FHA Rehab Loans For Beginners

By Joe Wallace

If you want to save money on purchasing a home, buying one that requires improvements or renovations can be a wise financial decision. FHA Rehab loans can help whether you want a fixer-upper property that’s new to you, or you want to remodel your existing home. These government-backed mortgages, or 203(k) Rehabilitation loans, combine the home purchase cost and renovation expenses into a single mortgage. This program lets you buy a house that would not otherwise pass the appraisal process. The FHA offers two primary types of Rehab loans to cater to different project scales. The Standard 203(k) option suits major rehabilitation projects typically requiring structural repairs, additions, or extensive remodeling. The minimum repair cost for this option is $5,000, and a licensed contractor must complete the work. There is | more...

August 19, 2024

FHA Loan Down Payment Rules

By Joe Wallace

One of the biggest worries for some borrowers interested in buying or building a home? The down payment. At the time of this writing, there are not many zero-down payment mortgages offered nationally by participating lenders offering government-backed mortgages; they include VA mortgages and certain USDA single-family home loans. USDA home loans are need-based mortgages with income caps and purchase price limits; VA mortgages are only for those with qualifying military service and certain surviving spouses of those who have died due to military service. There is no need-based requirement for FHA mortgages, and you do not have to be a veteran or a first-time home buyer to apply for one. FHA loans are offered to all who financially qualify, with no income limits. FHA down payment rules include a | more...

August 15, 2024

Fixing Credit Before Buying A Home

By Joe Wallace

When preparing to buy a house, it’s essential to give yourself plenty of time to improve your FICO scores and ensure a strong history of on-time payments before applying for a mortgage. However, there are other crucial aspects of credit repair to consider. To begin a credit repair journey, it helps to understand how credit reporting procedures work. Credit reports, which are compiled by major credit bureaus like Equifax, Experian, and TransUnion, contain comprehensive records of your credit history. This includes your private data, such as your current and former addresses, Social Security Number, and information on your credit accounts. There may also be information in your credit file from public records. Do you have a bankruptcy in your past? That will show up on your report along with any | more...

August 14, 2024

The Credit Check For FHA Cash-Out Refinances

By Bruce Reichstein

Is the credit check for an FHA cash-out refinance loan the same as for a new purchase home loan? Borrowers want to know how their credit will meet lender standards when applying for a refinance loan. Some make the same common mistakes in the months leading up to a refi loan application that others do when applying for a new purchase home loan. What can you do to increase your chances at refinance loan approval? Treat An FHA Cash-Out Refinance Loan The Same As Your Original Mortgage FHA cash-out refi loans require a new credit check and a new appraisal. The new appraisal ensures you are getting the value of your home that market values currently reflect. When rising property values may increase your potential cash out, the appraisal ensures | more...

August 13, 2024

FHA Refinance Options: No Cash Out

By Joe Wallace

FHA “no cash-out” refinance options can help first-time home buyers and experienced homeowners alike. If you need to explore your options to lower interest rates, shorten a loan term, or switch to a fixed-rate mortgage, consider the options discussed below. FHA No-Cash-Out Refinancing The FHA no-cash-out refinancing option is right when you want to modify the terms of your existing loan without getting cash at closing. Refinancing into a fixed-rate, no-cash-out FHA loan is suitable for many when interest rates are at or below the rates the borrower initially qualified for. Refinancing into a fixed-rate loan from an adjustable-rate mortgage can make for a more predictable loan, even if the rate isn’t as competitive as you might like. Having a rate that will not change or will not change again | more...

August 7, 2024

Qualifying For FHA Loans and VA Mortgages

By Joe Wallace

When applying for a government-backed home loan like a VA or FHA mortgage, it’s important to know how your credit issues may affect your ability to be approved for a residential mortgage loan. Knowing which potential credit problems you may need to correct (as early in your house-hunting journey as you can) can greatly benefit you before loan application time. Some borrowers don’t believe they have credit issues. However, they sometimes change their minds after reviewing credit reports due to errors, items that should have fallen off the report ages ago, and evidence of identity theft. Credit problems such as undischarged bankruptcy, a recent foreclosure, or delinquency on federal debts might hurt your chances of securing an FHA or VA-backed mortgage. To be approved for a mortgage, expect to spend | more...