December 11, 2017
Any potential borrower examining options for FHA home loans in 2018 should keep in mind some very important factors that may affect your choices for a new loan. Do you know what they are?
FHA Mortgage Loan Limits Have Increased for 2018
The average housing market (not a high-cost or low-cost area) will feature an FHA loan limit of $453,100 for a single-unit property. That is up from 2017’s limit for the same areas of $424,100. That increase might not make a huge difference to some, but the additional borrowing power may be helpful to others. The higher FHA loan limit applies to all FHA mortgages with case numbers assigned between January 1, 2018 and December 31, 2018.
Check Your Credit Scores As Early As Possible
There were many headlines in 2017 about data breaches, and more than one major corporation has been affected by security problems related to data protected by the Privacy Act.
If you are planning to apply for a home loan in 2018 but have not yet checked your credit reports, chances are good that you are not ready-you’ll need to know what your credit reports say long before you start filling out paperwork to apply for the new home loan. Borrowers need to start the credit report review process as early as possible to avoid delays later on, should evidence of identity theft or other problems show up on your credit report.
Plan Ahead Financially
Borrowers should know that the FHA has a minimum down payment calculated at 3.5% of the adjusted value of the property. Your down payment amount depends on the adjusted value of the home, so if you need to know how much to budget and save for your mortgage, it’s a good idea to know your general price range for a house farther in advance than you might think.
While it is true that some lenders may have a first time home buyer incentive, the FHA loan program itself does not offer any advantage or preference to new house hunters. It’s best to anticipate your home loan expenses without the promise of a price break as a new home loan applicant. That includes your down payment requirements, appraisal fees, inspections, etc.
Manage Your Existing Financial Obligations
At application time, your lender will review your debt-to-income ratio to see whether you can afford the home loan. Your debt ration is an important part of that equation so it’s important to reduce your existing debt as much as possible in the early stages of your home loan planning process.
You’ll also need to avoid applying for new credit leading up to your loan application. Getting another line of credit while you are applying (or shortly before you apply) can make it harder for your lender to justify approving the loan depending on circumstances, lender standards, and your overall patterns of credit use.
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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