November 21, 2022
Are you looking at 2023 and considering your home loan options to buy a house with an FHA mortgage? There is news from the housing sector that could mean improved conditions for a home loan in the new year.
While it’s true that changes in the housing market don’t happen overnight, some mortgage blogs and news outlets are reporting that the typical time houses spend on the market is increasing. Thats a good sign considering how competitive the housing market was last summer.
Is this the only indication that conditions may be improving for house hunters? Demand for houses seems to be falling and home loan interest rates are showing signs of gradual improvement. This could make 2023 a much better time to shop for a house than the summer of 2022.
And lest we forget, FHA loan limits are subject to revision at the end of the year, and they have increased two years in a row. While that does not guarantee another year of higher FHA loan limits, it would not be surprising to see them increase again.
Will these trends continue? If so, FHA borrowers could find themselves in a better position to buy. Here are some important considerations going into your home loan journey when the time is right.
What kind of home do you want to buy with an FHA mortgage? You will need to choose the right loan for the right purpose.
If you want to have a home built for you, you’ll need an FHA One-Time Close Construction Loan, which is a different option than the loan you would need to buy a manufactured home, for example.
If you want to buy a fixer-upper, you should ask your loan officer about the FHA 203(k) Rehabilitation Mortgage. And if you want a condo, ask the lender whether the condo project you’re interested in is on the FHA-approved list or if other considerations might apply.
And then there’s the question of mortgage loan interest rates; are rates still high when it’s time for you to apply for your FHA loan?
Consider an FHA Adjustable-Rate Mortgage (FHA ARM) instead of a 30-year fixed-rate mortgage. Adjustable-rate loans are best when you have a plan for dealing with your mortgage before, during, and after the first rate adjustment.
You will likely want to consider selling or refinancing when the introductory rate period expires. Ask your lender about how long that intro rate might last. Did you know some ARM loans have introductory rates for as long as 10 years? Ask about the rate and how often it is adjusted, and by how much. You will want to plan ahead of time what to do once the rate adjustments begin.