5 Important FHA Home Loan Tips
That means these loans are not need-based loans and FHA mortgages are NOT restricted to first-time home buyers.
FHA Loan Tip #1: Loan Limits Go Higher for Larger Properties
It’s an easy mistake to make--when you look at the FHA loan limits by county in areas where you are considering purchasing a home, don’t forget to check the loan limits for both single-unit properties and multi-unit homes.
When you glance at the loan limits--especially when you aren’t used to looking at these charts and tables--you may see one number that jumps out at you in that county. But is that loan limit the right one for the size of the home? A four-unit property has a higher loan limit than a one unit home and FHA borrowers can qualify to buy a home with as many as four living units.
FHA Loan Tip #2: Learn to Love Negotiating
Why? Because your seller can, if they agree, pay up to six percent of the sale price of the home in closing costs. That requires you and the seller to make a deal--don’t be afraid to try!
FHA Loan Tip #3: Pre-Approval and Pre Qualifying Are not the Same Thing
Investopedia reminds readers that getting prequalified is an initial basic step. You give some preliminary information to the lender and generally does not include a credit report check. Pre-approval is the more involved step that establishes your creditworthiness. But both are important.
FHA Loan Tip #4: Home Loans for Purchase Are Different Than Fixer-Upper Loans
To save time, be sure to tell your lender whether you want to buy an existing home that can pass an appraisal and home inspection or whether you are specifically interested in finding a fixer-upper home.
Purchasing a home with an FHA loan to repair is done with an FHA 203(k) Rehabilitation Mortgage, this is a different loan than for purchasing existing construction that you do not have to do repair work on.
FHA Home Loan Tip #5: Appraisals Are NOT Home Inspections
No matter what your lender, seller, real estate agent, or anyone else calls it, the appraisal is not an inspection. If you, the borrower, have not arranged and paid for the home inspection and been given a report of the results of that inspection, you have not received a home inspection.
Remember that appraisals are tools for the lender and not the borrower. If you make the mistake of purchasing a home without a home inspection, choosing to rely on the appraisal only, chances are very good you will find a problem with the home the appraisal did not reveal.
Appraisals are NOT meant to detect any/all problems with the home and the appraiser does not have to be an expert in all areas of the home to make a determination as to the fair market value of the property. And that is the primary goal of the appraisal in addition to making sure the property meets basic MINIMUM standards.
Learn About the Path to Homeownership
Take the guesswork out of buying and owning a home. Once you know where you want to go, we'll get you there in 9 steps.
Step 1: How Much Can You Afford?
Step 2: Know Your Homebuyer Rights
Step 3: Basic Mortgage Terminology
Step 4: Shopping for a Mortgage
Step 5: Shopping for Your Home
Step 6: Making an Offer to the Seller
Step 7: Getting a Home Inspection
Step 8: Homeowner's Insurance
Step 9: What to Expect at Closing
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