Are you considering your home loan options? FHA mortgage loans have more flexible credit requirements more consumer-friendly loan options, but even with more lenient credit guidelines (compared to some conventional mortgages) there are a number of areas to consider in the preparation stages of your loan.
Some are already ahead of the curve when it comes to getting financially ready for a major loan application, others are really starting from ground zero. Do you know how ready you are to fill out that mortgage loan application?
Having Enough Preparation Time Is Important
It does cost money to buy a home–there are plenty of up-front costs including appraisals and the home inspection, etc.
Financial experts advise taking at least a full year to save, budget, and even to research the new loan. The research phase–which should include shopping around for the right lender who can work with your needs–is important.
Before you fill out an FHA loan application, you’ll want to know about the neighborhood you want to buy in, you should have a rough idea of how long you plan on staying in the home, and whether or not your future plans include putting that home up for sale before your loan is paid off.
You will also need to begin monitoring your credit reports and payment history–you want to avoid surprises at application time. All borrowers applying for a new home loan should have, at a minimum, 12 months of on-time payments (for all financial obligations) on their credit record leading up to the loan application.
Know Your Credit Scores
Borrowers who don’t know their own FICO scores are also at a serious disadvantage- the lender is required to check your credit history and FICO scores, and that will actually happen more than once before the loan closing day.
Your home loan planning should include getting to know what the typical home sale prices for properties are in the market you want to purchase. You can use this information to help you run calculations on projected basic monthly mortgage payments.
Your actual payment will include not only the amount of the principal and interest but also any required mortgage insurance, hazard insurance, property taxes, to name a few. Knowing the answers to these questions and others related to them will make you a much more informed and prepared house hunter.