Are you ready to stop renting and start owning your own home? The FHA home loan program was designed to help borrowers get into affordable homes with a low down payment requirement.
FHA loan rules feature more forgiving FICO score standards (lender standards will also apply), and first-time home buyers should know there are down payment assistance programs in many states that can help.
What sort of questions are common for FHA home loans? Read below to learn some important details every new borrower should keep in mind.
How Long Does It Take To Save And Prepare For A Mortgage Application?
Start planning as early as possible. It’s good to give yourself a year or more to review your credit reports, start monitoring your credit, and work on getting your record of on-time payments with no lates or missed payments for at least a year or better.
How long it actually takes for you to prepare depends on the state of your credit history, how much money you need for closing costs, etc.
Why Do People Choose 15-Year Mortgages Or 30-Year Home Loans?
The term or length of your mortgage helps determine how much you pay per month. A $250 thousand dollar home on a 15-year loan will have higher payments but you will save money on the loan on interest payments.
Did we mention that many FHA loans may feature lower interest rates on the 15-year loan term?
For those who can afford to do so and have a financial goal of saving money over the entire loan term, the 15-year mortgage is an option worth exploring. A 30-year loan is better for those who need lower monthly payments and who may be planning to stay in the home long-term.
Who Can Help Me With Closing Costs?
The seller is permitted to contribute up to six percent of the sale price of the home toward your closing costs. FHA home loans allow you to finance certain closing expenses like the Up Front Mortgage Insurance Premium (UFMIP), and doing both (seller-paid closing costs and financing the UFMIP) can save a lot of money out-of-pocket if that’s what you need.
Can The Seller Help Me With My Down Payment?
No. FHA loan rules say no party with a financial stake in the outcome of the home loan can provide down payment assistance.
Will I Be Required To Pay Private Mortgage Insurance On An FHA Mortgage?
Private mortgage insurance is not required but the FHA does require a mortgage insurance premium as part of your monthly payment. There is an Up-Front Mortgage Insurance Premium (mentioned above) and a monthly payment.
Can I Be Charged A Penalty For Paying Off My FHA Mortgage Loan Early?
FHA home loans are not permitted to include a penalty for early payoff of the loan. However, your mortgage servicer may have specific procedures for making the final mortgage loan payment–find out what that procedure is where applicable before your final month’s payment.
Do I Have To Use The Same Lender To Refinance My FHA Mortgage?
No. You can shop around for a lender to refinance your FHA home loan. You can also use any participating FHA lender to refinance a non-FHA mortgage into a FHA home loan.