Questions to Ask About an FHA Home Loan Before You Apply
March 16, 2023
Are you tempted to build a home instead of buying existing construction? If you want a property that is larger than one living unit, consider buying an existing construction home instead since many lenders who deal in FHA One-Time Close construction loans restrict the project size to a single unit.
If you choose to build instead of buy, you will either need land to build on or you will need to purchase land to build the home on.
If you choose to buy existing construction and decide on a multi-unit home, you’ll want to compare the costs of purchasing a duplex or townhouse compared to that of buying a two-unit property configured differently such as a two-bedroom suburban home.
Are you looking at newer homes or older ones? Assuming you want to buy existing construction with an FHA loan, older properties may have appraisal issues that newer ones do not; but older properties can be purchased with an FHA 203(k) Rehabilitation mortgage and you can repair them with loan funds.
This option eliminates the need for the home to be in “appraisal ready” condition at loan time but it does require you to make the home compliant with FHA standards and local building code as part of the rehab work and as a condition of loan approval.
And if you are buying a newer home but still want to do some improvements without applying for a rehab mortgage, you can always consider an FHA Energy-Efficient Mortgage, which adds extra loan funds specifically for installing energy efficient upgrades to the property such as storm windows and doors, energy efficient appliances, and more.
An FHA Energy Efficient Mortgage can be used with nearly any type of FHA home loan; it is also available with FHA refinance loans. You can even add this to an FHA 203(k) Rehabilitation mortgage to get more mileage out of your home loan.
Other important questions to ask yourself in the loan planning stages have to do with how affordable your loan will be. Do you need down payment help to afford your home loan? If so, begin searching your state and local government official sites for homeowner programs and down payment assistance programs.
The FHA and HUD do not offer these, but your state and local government might, in partnership with area lenders and other agencies. Down payment assistance is sometimes offered on a need basis. In other cases it may be offered to anyone who qualifies for the program as a first-time buyer or a buyer who has not owned a home in three years. Check your local state government to see what programs may be offered in your area.
------------------------------
RELATED VIDEOS:
FHA Loans Have Eligibility Requirements
The U.S. Government Backs Mortgages Through the FHA
Financed Properties Must Meet FHA Minimum Standards
FHA Loan Articles
August 27, 2023The Federal Housing Administration has specific credit requirements and guidelines for borrowers looking to buy or refinance homes with an FHA loan. In addition to what FHA guidelines state, lenders may have more stringent requirements that may vary from one lender to another.
August 23, 2023Mortgage APR (Annual Percentage Rate) and a loan's interest rate are two different things, although they are closely related. Understanding the difference is an important part of a borrower's analysis of the true cost of their mortgage.
August 19, 2023FHA refinance loans allow homeowners with existing FHA loans to refinance their mortgages. These loans are designed to help borrowers take advantage of lower interest rates, reduce their monthly mortgage payments, or access equity in their homes for various purposes.
August 14, 2023FHA loans typically require a minimum down payment of 3.5% of the purchase price of the home with the right credit score. This means that if you're buying a house for $240,000, you would need to make a down payment of at least $8,400.
August 10, 2023FHA loans have specific rules and requirements for borrowers who have filed for bankruptcy. The guidelines can change over time, so it's essential to consult with a qualified lender or FHA-approved counselor for the most up-to-date information.
