Credit Not Perfect? FHA may be the Answer.
Now that home prices have leveled in many parts of the country, many first time homebuyers are looking for creative ways to move into the home of their dreams. FHA, the Federal Housing Administration, is making it easier for many to purchase with low down payment requirements.This allowed many first time homebuyers to take advantage of the $8,000 tax credit that expires at the end of the year.How does FHA make home buying so attractive?
For starters, you can finance a new home with very little down. 3.Exactly 3.5% of the purchase price. Unlike a conventional loan which requires at least 10% down with exceptional credit, first time homebuyers can get the keys to a new home with just 3.with 3.5% down, and it does not have to be your money. The money can be gifted to you by a family member. Conventional loans for years have been the staple for purchasing new homes. 100% financing and 80/20 loans were common place for first time homebuyers. Now, expect to pay anywhere from 10 to 20 percent down to get a conventional loan, and above 80% is going to require Private Mortgage Insurance.
FHA also allows first time home buyers the opportunity to purchase when conventional lenders issue a denial. Because FHA loans are insured by the Federal Government, the loans are a bit more leniant on credit standards. For most conventional loans, a 680 credit score is required, with otherwise flawless credit.A 620 credit score will be required by most lenders for an FHA home loan.A 620 Credit score will be required by most lenders but some select lenders can go as low as 580.
FHA is a very strong option for purchases. Although 3.100% of the 3.5% down payment requirement can be gifted.This means you can have your down payment gifted by a family member, and own your home putting any of your own money down.
Up to 6% of the purchase price can be in the form a seller concession. Conventional loans limit the seller credit to 3%, while you can go as high as 6% through FHA.This money can be used to cover lender fees, points, and any other closing costs.A great way to take advantage of the seller concession is through the 2-1 buydown.By using this seller concession, buyers can get an interest rate 2% below the normal rate.
You can also expect the appraisal process to be a little smoother with FHA compared to a conventional appraisal.FHA loans do not require that the appraisal be ordered through the newly formed home valuation code of conduct (HVCC) which has slowed the process down significantly.
FHA has been around since 1934, and now represents almost 50% of the purchase market.The growing popularity is not surprising among first time homebuyers. To find out more about how to qualify for an FHA home loan, visit http://www.timmarose.com
5 Useful Tips in Buying a House
Buying a house is a very serious matter that comes in to people’s lives. It is very risky to invest your money in buying just any house you find. You should have some guidelines that will help you decide on a house that will be perfect for you. Here are some:
1.Be aware of your legal boundaries
When you are ready to buy your own house, be sure you understand your rights as a homebuyer. Being aware of the process of buying a house is enough to prevent you from getting scammed. You can seek help from knowledgeable persons like a real estate agent or a broker if you can’t do your home work personally. Make sure that the agent you hire is licensed and have a wide knowledge regarding the area.
2.Make sure you have the financial strength to go for it
Your budget is really a big deal in buying your own house. What you want is different from what you need, so be practical. A smaller house can do the job for you if you live alone and travel everyday? Make sure that you make the best for your money. Seek help or ask for suggestions especially for those who have knowledge in real estate prices. If you can’t stay for at least a year, buying a house is inappropriate for you. You may save a whole lot more of money if you sell it urgently.
3.Make sure it matches your lifestyle
Make your house a home. Be sure it really fits your way of life and you are comfortable with it. A good example of this is if you’re working in an office, a good place to find is near or in the vicinity of your office. If you love nature, a good place to find is outside the city with clean air, near parks, has a mountain view or near at the beach. Your personality really matters in finding a good house. Make sure to look at its suburbs first and try to gather some information about the area and its surroundings. Also try to figure out the kind of neighbors you are likely to have.
4. Consider your future plan
If you’re newly married, you might to consider how many kids you want to have. You can assess the number of rooms or the home space that will be favorable for you. It makes better sense if you can afford a house that is close to a good school. School districts are more important to home buyers, therefore, it will increase your property values.
5. Be organized
It is very important to make your document files organized and safe. Because it will prove that you own the house. It will help you a lot especially when it comes in paying your house payments (taxes and amortization).
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