Things You Need to Know Before Completing Your FHA Loan Application
The aim of the FHA is to encourage more lenders to give out loans to atypical home buyers. The FHA backed loans allow legal citizens to buy properties. Applicants who finance through FHA typically have less than ideal credit, or difficulty establishing credit. By reducing the risk from monetary losses if a mortgagor becomes non-compliant, these loans guarantee that those who finance the loan(the lenders) will be paid, regardless of potential defaulting. An FHA mortgage loan calculator is a useful tool when determining your ability to maintain a monthly payment on a specific loan.
FHA Mortgage Loan Calculator
Many first-time home buyers file the FHA loan application when they decide to purchase a house. One advantage of an FHA loan is a significantly lower down payment. This may be helpful for those home buyers that lack sufficient wealth in savings. Many buyers, upon submitting an application, find that they are eligible for a mortgage through an FHA loan. Having this loan approval can prove to be substantially beneficial for the buyer, as both down payment and interest rate are typically much lower. Try using an FHA mortgage loan calculator to estimate your costs, and determine if an FHA loan may be suitable for your home purchasing needs.
It is very important to figure out what you can afford each month as your mortgage payment. Using the FHA mortgage loan calculator, a potential buyer is able to determine how expensive a monthly payment would be for a specific home valuation. Further, the FHA mortgage loan calculator tools allow the homebuyer to access estimates on property tax rates and insurance costs. These tools allow anyone that is considering a home purchase to know what they are getting into before they commit to a down payment. By thoroughly understanding the costs associated with your housing options, you are able to move confidently into the future as a proud homeowner.
Credit scores that are 580 or higher are key to funding your dream home. Potential homeowners that qualify on their FHA loan application can close on a house with a low-down payment. If your credit score is lower, you can still get approval for your FHA loan application, but the down payment expense will likely be higher. Credit scores between 500 – 579 typically close with this higher down payment. Those with lower credit scores will likely end up with higher interest rates as well.RELATED TOPICS Millennial Money: Student Loan Default Can Gut Your Paycheck
FHA Loan Application
Approval for your FHA loan application depends on several factors. Using an FHA mortgage loan calculator takes these variables into consideration to provide information about homes and price ranges that are suitable to your housing choices. Knowing what you qualify for is the first step in becoming a stable homeowner.
When completing an FHA loan application, the borrower must first be a lawful citizen, possess a valid social security number, and reside inside the United States. Additionally, when submitting your FHA loan application you need to be of the legal age as set forth by the guidelines of whatever state you reside in.
To qualify on your FHA loan application, you also need to prove your work history. FHA guidelines expect you to have a steady work history of at least 2 years, or have been continuously working under the same employer for an extended period of time. Again, the FHA loan application calculator helps identify these variables so that you have all the information needed to make informed decisions.
Without exception, every FHA loan applicant must pay the minimum down payment set forth by their mortgage agreement. An FHA mortgage loan calculator can help establish an estimate for this down payment.
When purchasing a home through the FHA, the occupancy clause mandates that the borrower be the primary resident of the property. This doesn’t mean you can never leave the property, but you must be the primary resident for legal purposes.
Before someone can purchase a home through the FHA, the borrower needs to complete a property appraisal. This property appraisal is used to determine the current value of the property in question. These must be performed by an FHA-approved appraiser.
When submitting your FHA loan application, you need to prove that you have the income sufficient to pay your mortgage. This is called the “front-end-ratio.” This number must be lower when compared to your total gross income by a certain percentage. You can determine how much your payment would be by utilizing the mortgage calculator.
Getting your FHA loan application approved means that you have met the minimum credit score necessary for the loan. For maximum financing, you need to have a score of at least 580. If your score is low you may still get approval on your FHA loan application. These loans, however, will typically cost more over the life of the mortgage. FHA qualified lenders should use discretion when determining applicants’ financial credit merit.
Having a stable financial footing is essential to getting your FHA loan application approved. Using the loan calculator can help determine the amount of your income that will be used as the monthly mortgage payment. Interestingly, even if you have filed for bankruptcy in the past, you can still get approved for an FHA loan. However, if this is the case 2 years need to have expired since filing, and efforts to improve credit must be proven. Exceptions can be made on the basis provided that the applicant can prove circumstances out of their control affected the situation. Even after foreclosure, approved FHA loans are still possible. Three years must pass after foreclosure and credit needs to be re-established. Exceptions on FHA loan applications can be made again if the borrower can provide good cause as to why the situation influencing their poor financial status was beyond their control.
To qualify for your FHA loan application, the home purchase must meet specific standards set forth during the home inspection process. If your house does not meet these strict standards, you risk having your FHA loan application denied. Some issues can be readily fixed. A seller may be able to remedy the problem without difficulty, but they are not obligated in any way to make these FHA necessary improvements. As a buyer it is your responsibility to address the concerns raised during the home inspection process. If the seller refuses to address the issues, you have the option to personally pay for the property repairs. Money used for the repairs will be put in escrow until the repairs are completed.