FHA Home Loan Basics You Should Know
The truth? FHA loans are not restricted to first-time buyers. Where it gets a little complicated?
You do have the option to apply for certain state-level down payment assistance programs and closing cost assistance programs that may be able to help you with your FHA mortgage as a first-time buyer.
The requirement in these cases is the individual down payment assistance program’s rules, not the lender’s or the FHA’s.
First-time home buyer programs are an important option for those who qualify--they might help save you thousands of dollars in up-front costs on the down payment and other expenses associated with closing the mortgage.
Another option in this area that is NOT restricted to first-time homebuyers? FHA loans allow the seller of the home to contribute up to six percent of your closing costs. That six percent limit is firm--any amount valued above that six percent results in a dollar-for-dollar reduction in the FHA loan.
And sometimes, a first-time homebuyer is at a disadvantage because of a lack of familiarity with their options. Some do not realize it is possible to apply for an FHA loan to build a home from the ground up.
Even a first-time homebuyer should at least consider this option as the down payment requirement is the same as with other FHA mortgages. You’ll need a minimum 3.5% if you qualify for the lowest down payment with FICO scores, payment history, and reliable income.
Furthermore, you DO NOT have to be an FHA borrower currently to refinance your existing mortgage into an FHA loan? FHA refinancing can get you out of at a conventional loan into an FHA mortgage or help you out of an adjustable-rate mortgage.
If you have an existing FHA mortgage it is possible to refinance an FHA loan to a lower rate or payment using an FHA Streamline Refinance option. Non-FHA mortgages do not qualify for this type of refi and it features no cash back to the borrower.
One important perk of FHA loans you should definitely know as a first-time or return borrower? FHA mortgages, including refinance loans, have no penalties for early payoff of the loan.
If you plan on paying off your mortgage earlier than the loan term specifies, be sure to contact the lender about the early payoff. You may find there is a special procedure for delivering your final mortgage loan payment.
A Good Faith Estimate Provides Mortgage Information
Measuring Your Loan-to-Value Ratio
Monitor Your Credit Score
Do you know what's on your credit report?
Learn what your score means.