It is a frightful feeling to finally decide on getting a house. Houses are a huge responsibility. From securing funding deals to finalizing papers, to actually moving in and maintaining cash-flow able to sustain daily life and keep things going—all these motions can be overwhelming.
If you’ve done your research, however, and have decided to course your housing expedition through the Federal Housing Administration, you’re in safe hands. FHA loans are particularly kinder than convention or non-conforming loans as requirements set for these are not as stringent and hell-bent.
If you’re definitely in pushing for an FHA loan and are 100% ready to apply for one but aren’t sure how here are a few tips:
Determine Your Eligibility
Before anything else, it is best to understand what credit report and credit score are. These two are one of the first few things that will be looked into when applying for loans. As the name implies, a credit report is simply a report of how and what you’ve been using your money on. A credit score, on the other hand, is based on how efficiently you’re able to restore your funds after depleting them.
The most popular method of figuring out your credit rating is by checking your FICO score. This may range from 300 to 850, with 500 being the usual minimum for FHA loans. Take note that those with a score of 580 have higher chances of bagging better deals. The bigger the digits, the better you prequalify FHA loans.
You may want to gather records of your credit score from Experian, Equifax, and TransUnion. These are three of the most credible credit reporting agencies in the U.S. and are more often than not the ones that are referred to for verification. Your aim is to check them for inconsistencies and errors.
Save As Much As You Can
What many people don’t consider all the time is that when you apply for loans in general, FHA ones included, you will have to have enough funds to close deals. Stacked against conventional mortgage loans, FHA loans may only demand a 3.5% down payment versus a conventional loans’ 5% to 20% upfront deposit. Still, the 3.5% down payment can already be a handful for many.
Realtors and mortgage brokers will also sit you down on finances involving land titles and closing costs. This is exactly the reason for making sure savings are available long before a loan is applied for—to cover cash payments needed on the onset of initial transactions.
The more liquid you are with whatever assets you have, the easier it is for you to go about these negotiations and additional payments.
Look For An FHA-Approved Lender and Prepare The Documents Needed
FHA-approved lenders are everywhere so finding one shouldn’t be difficult. Start by utilizing the search tool made ready in hud.gov‘s website. Once their page is opened you will find that a specific box asks for a lender’s name. Should you not have a name in mind, type your city and state and you should be routed to a list of FHA affiliates in your area who may be able to help you.
It is not imperative for you to approach an approved lender close to where you are, although doing this will make things easier for the both of you. You may also want to Google each of the FHA affiliates you consider as it is best to know their online backgrounds before even contacting them. Feedback from other borrowers will help you determine which lender the best fit is for you.
Making sure the documents needed are also ready to avoid delaying the processing of your loan. The sooner you’re able to get things started, the sooner you’re able to start building home equity. The succeeding steps should be simple and you should know what to do next as guided by your lender.
Be Wise and Realistic in Home Shopping and Understanding Contracts
Should you be given the green light in your FHA loan application, a loan can still be denied if the property you eye on purchasing does not meet appropriate appraisal standards. Make sure you and your FHA lender are able to work out a deal, as much of the requesting of papers and property acquisition comes from your lender.
Going through every single file, line, down to every minute word in your final paperwork is also essential. Make sure you understand everything before signing.