October 11, 2017
How can I get ready for an FHA loan application? The process includes some advice you’ve likely heard before (check your credit, make sure you have on-time payments, and avoid new credit applications before you apply for a home loan) but there are other steps to take in the earliest stages of your house hunting journey that can be very helpful.
Home Economics
Do you know how much it will cost to live in and maintain your home? Utility bills for a house are likely to be higher than for a small apartment. It’s important to start learning what typical utility rates, commuting costs, and other expenses related to owning your home instead of renting. You’ll also want to investigate how much it may cost down the road to repair or replace appliances, fix or replace your roof, etc.
Know Your Rights
You cannot be denied a home loan for reasons that aren’t related to your financial qualifications or the condition of the property you wish to purchase. National origin, family status, gender, orientation, disability, and related issues cannot be used to deny you a rental or purchase. Knowing your rights before you start to look for a home to buy is a very good idea.
Know Lending Procedures
If you don’t know how the home loan industry works, you might not be fully prepared to make an informed purchase. Did you know that the required FHA appraisal is often mistaken for a home inspection? Never trust the results of the appraisal alone to decide whether a home is suitable for you or not. Always pay for the optional, but far more in-depth home inspection before committing to purchase a property. Furthermore, federal law requires your lender to provide you with a “good faith estimate” (GFE) explaining the costs associated with your loan.
According to the Consumer Financial Protection Bureau (CFPB), “As of January 1, 2010, a loan originator is required to provide a consumer with the standard GFE form that is designed to allow borrower s to shop for a mortgage loan by comparing settlement costs and loan terms.”
That’s according to a CFPB publication titled CFPB Consumer Laws And Regulations, which adds:
“The first page of the GFE includes a summary of loan terms and a summary of estimated settlement charges. It also includes information about key dates such as when the interest rate for the loan quoted in the GFE expires and when the estimate for the settlement charges expires.”
“The second page discloses settlement charges as subtotals for 11 categories of costs. The third page provides a table explaining which charges can change at settlement, a trade-off table showing the relationship between the interest rate and settlement charges, and a shopping chart to compare the costs and terms of loans offered by different originators.”
These are important things to know before you start the home loan application process. Don’t be taken by surprise; start your house hunting “homework” as early as possible. It’s best to start a year in advance of your loan application, about the same time you’ll want to start requesting copies of your credit reports to review.
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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