December 29, 2017
Get ready for your FHA home loan in 2018 with some simple planning, budgeting, and market research. Buying a new home-or having one built with an FHA One-Time Close construction loan-requires some advance planning and saving, but your new home is well worth the effort. How ready are you to apply for a home loan in the new year?
Do Some Housing Market Research
What are typical house prices in your area? How do those prices match your budget? You can use an online mortgage calculator to help you figure out how much an estimated monthly mortgage payment could be based on the price of the home, interest rate, the amount of your down payment, and other factors.
Once you have your estimated monthly mortgage payment, you can decide if the prices you are seeing are too high for your budget or not; knowing your estimated price range for a new home can be an important time-saver.
Do you know what the FHA loan limits are for your chosen housing market? You can check the 2018 FHA Lending Limits list (which is broken down by state) to help you get an idea of the amount of the loan you may qualify for in your area.
Do Some Home Loan Homework
Do you know what kind of mortgage you need? Are you interested in buying a typical suburban home, a condo unit, or perhaps you would like a home built to suit?
All three of these different purchase options (and they are not the only options available) have different requirements.
For example, FHA condo loans require the condo project to be on or added to a list of FHA-approved projects. If the condo you want isn’t on the list, you will need to work with your loan officer to see if it can be added to the list. Condo projects may be added as long as they meet FHA standards which include no restrictions on the owner when it’s time to sell the condo unit.
FHA construction loans require a different set of procedures because of the more complex nature of the transaction; builders must be paid, inspections must be carried out, and the lender must determine the market value of the property as-is as well as the value “as-completed”. Your loan officer will explain the requirements of the specific type of loan you seek.
Check Your Credit
One of the most important steps you can take early in the home loan planning stages is to check your credit and actively monitor it in the months leading up to your home loan application.
You don’t want any surprises when it’s time to apply for your home loan; evidence of identity theft or erroneous credit report data should be detected and dealt with many months prior to your filling out loan paperwork.
If you do find things on your credit report that require contesting or correcting, you may need additional time to clear up the problem. If you have to file police reports and work with a fraud investigation representative, you may find that it takes longer than you anticipate to clear up the issue(s). It’s best to begin working on this the moment you decide you want to buy a home with a mortgage loan.
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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