Articles in Category: FHA Loan Basics

July 2, 2024

How To Qualify For An FHA Mortgage

It’s likely the most commonly asked question about FHA loans. “How do I get approved for an FHA mortgage?” The answer starts with some numbers, but there are other important factors to remember. It’s not all about FICO scores, though they play a significant part in the lender’s decision to approve or deny a loan. FHA Loan FICO Score Requirements For Home Loan Approval If your FICO scores fall between 500 and 579, FHA loan rules say you must pay 10% down, assuming lender standards allow loan approval for those scores. Applicants with FICO scores of 580 or higher are required to make a 3.5% down payment. However, FICO scores aren’t the only factor that influences loan approval. Stable Income Rules If you are a typical college graduate, depending on | more...

June 26, 2024

FHA Home Loan Planning

By Joe Wallace

If you want to buy a house with an FHA mortgage, there are some simple steps to take as soon as possible in the planning and house-hunting stages. There are also a few things to avoid, as we examine below. Budget And Save Money Early Smart borrowers build in some extra funds to cover unexpected costs toward owning a new home. You likely don’t expect the appraisal to include instructions on dealing with evidence of termites or what the FHA calls “wood-destroying pests.” Some wind up paying for or negotiating with the seller to pay for an exterminator. This is just one example of unexpected costs you may need to pay on your way to owning your own home, and adding some extra money just in case is a smart | more...

June 13, 2024

Buying A Home: How To Inspect A House

By Joe Wallace

Borrowers should always pay a licensed pro to inspect a home as a condition of buying a house. But before paying for that important service, the borrower has to look at multiple homes to find the right one to make an offer on. That process can be daunting for some first-time home buyers. What do you need to look for in a home’s physical condition to decide whether to buy? Inspecting The House In some cases you can learn by looking and researching later. When reviewing the basement, do you see cracked walls? A bit of research reveals that may be a symptom of a foundation problem, which is a serious issue. Another red flag is evidence of “excessive moisture” in the crawl space where applicable. Pooling water in the | more...

June 12, 2024

FHA Appraisals: What To Remember

By Bruce Reichstein

The FHA appraisal is one of the most important pre-closing day aspects of your home loan process. Without an appraisal, your lender can’t know if the home meets minimum basic standards for safety, remaining economic life, and serviceability. The lender also can’t make a realistic judgment about the fair market value of the home without an appraisal. What should you know about this process and how it affects you? FHA appraisals are a tool for the lender and not a tool for the borrower. You may be privy to the results of the appraisal, but that does not mean it was designed to help you as a borrower. It is not meant to tell the borrower anything actionable, especially where the condition of the home is concerned. That is the | more...

June 11, 2024

What To Ask When Buying A Home With An FHA Loan

By Joe Wallace

If you want an FHA loan to buy a home, it is always a good idea to compare lenders, real estate agents, and other service providers who serve the housing industry. When comparing, there are important questions to ask each provider to learn more about whether they are right for you. How Long Have You Worked In This Field? The answer will vary depending on the inspector, real estate agent, or lender and when doing so but there are trade-offs to consider for newcomers to the business. A more experienced lender or real estate agent likely understands more complex issues related to your home loan and can deal with them more efficiently than a “noob.” That said, newcomers aren’t always the liability you might assume they are, especially if they | more...

Getting An FHA Mortgage After Bankruptcy

June 5, 2024

Buying Older Real Estate With An FHA Mortgage

By Joe Wallace

Interested in buying an old house? A fixer-upper? Does the house you fell in love with need extensive repairs to make it worth owning? FHA loans include options for older homes and fixer-uppers. We cover some key points below. FHA Loan Options Are More Flexible Than You Might Think There’s no single FHA mortgage option. You can’t use one loan to buy any property type that is allowed. There are just too many different options and needs that must be taken into account in the housing market. Want to build a home from the ground up? There’s an One-Time Close FHA construction loan for that. Want to buy an old property and rework it into a newly renovated home? There are FHA loan options for that choice, too. If you find | more...

June 4, 2024

What To Consider As You Plan Your FHA Mortgage

By Joe Wallace

Are you a new borrower with questions about how the FHA loan process works? There are important details to learn and remember to get along the way to get the most out of your FHA mortgage. Borrowing Limits For FHA Mortgages For FHA loans, HUD 4000.1 says 31% is the highest number for typical FHA mortgages without an Energy Efficient Mortgage add-on. Those loans can technically go higher. FHA loan amounts are typically guided by the appraised value of the home and the FHA loan limit for your area, among other factors. It’s possible to be approved for an FHA loan for up to 96.5% of the home’s sale price. That means your downpayment is 3.5%, which is comparatively low. But should you pay only the minimum? Borrowers interested in | more...

May 29, 2024

How To Avoid Confusion When Buying Your First Home

By Joe Wallace

Many first-time house hunters are confused by mortgage loan industry jargon, real estate acronyms, and industry terms used incorrectly. How do you separate the facts from the fiction when learning new terms along the way to closing day? There are many issues. Calling an appraisal an “inspection” is one good example (see below.) There are also industry terms that sound familiar but don’t mean what some think they mean. The whole concept of mortgage insurance is a great example (see below). We examine some of the most common of these below. Owner-Occupied Homes Are Not Investment Properties An FHA purchase or refinance loan is meant for owner-occupiers. These are the buyers who want the FHA loan to be used for the property they intend to live in. An FHA purchase | more...

May 21, 2024

Five Tips About FHA Mortgage Loan Interest Rates

By Joe Wallace

FHA mortgages feature lower interest rates than conventional mortgages thanks to being backed by the U.S. government. And while mortgage rates in 2024 are higher than in years past, FHA borrowers may still qualify for a rate that’s lower than some conventional equivalents. Those who qualify for the lowest down payment save money over the lifetime of their mortgages thanks to the lower rates, but how do you qualify for the lowest rate possible for your specific purchase? Here are some important tips about mortgage loan interest rates you should know in the planning stages of your new home loan. Credit Scores And Interest Rates Are Connected That statement does not pertain to the overall interest rate offered to all borrowers. Your lender will offer you a mortgage loan rate | more...

May 15, 2024

Buying A Home? Ask The Seller These Questions

By Joe Wallace

Are you looking for a home to buy with an FHA loan? It’s good to create a list of questions to ask the seller. Making the most informed decision you can on a specific house is important, and in addition to what you learn by asking about natural disasters in the area, property taxes, and the age of the roof, the way the seller responds to your question can be just as important as the answer you get. Asking Questions You should definitely do your own research on the local area to learn whether floods, tornadoes, hurricanes, or other natural disasters are a problem. But don’t miss the chance to ask the seller, even if you already know the answers. Ask the seller, “Has the home itself experienced a disaster, | more...