FHA home loans, like all mortgages, represent a major investment for a borrower. There are things you should do in the FHA home loan process to get closer to loan approval, and there are things you should definitely NOT do as a new home buyer. Do you know what they are?
FHA Loans: DO Work On Your Credit As Early As Possible
Your FICO scores will determine the interest rate you are offered and the amount of the down payment required. It’s best to examine your credit report at least a year ahead of your loan application to make sure you have plenty of time to work on credit issues.
FHA Home Loans: DO NOT Run Up More Debt Prior To Your Home Loan
Opening new credit cards, adding more to your existing credit card balances, and other mistakes will hurt your chances to get your home loan approved, especially as a first-time home buyer. Don’t plan on adding more credit in the year ahead of your home loan application. Instead, concentrate on paying down your existing balances for best results.
FHA Home Loans: DO NOT Assume You Don’t Qualify For An FHA Loan
Some assume their credit is too poor, others assume they “make too much money” to qualify for an FHA mortgage-usually because they assume FHA loans are need-based. They are not. In the end you should let the lender determine whether you are eligible for an FHA loan or not.
DO Start Saving Now For FHA Home Loan Expenses
Home loans require down payments, appraisal fees, title fees, the lender’s origination fee, mortgage insurance, compliance inspection fees where required, and other expenses. Don’t make the mistake of thinking you can get a mortgage loan with zero out-of-pocket costs as there will definitely be expenses along the way. Start saving now for these costs and you will thank yourself in the long run.
FHA home loans require certain expenses such as the down payment to be properly sourced and such funds cannot come from certain types of cash advances or other unapproved means-you will be required to document the sources for such expenses and the lender cannot accept payments that cannot be properly verified. Borrowers who might be thinking they can make a down payment using a payday loan, credit card cash advances, or other unapproved sources will be disappointed when the lender is forced to reject these funds.