5 Most Important Things to be Aware of before Applying for the FHA Home Loans

Are you finally thinking of investing in real estate and owning a place of your own? This is indeed a great initiative which will require not only a great real estate agent but also the best financial advice from someone whose experience is no less than probably 15+ years. Keep in mind not only it is important to have a house of your own but equally or more important it is to have the right loan in order to secure financial stability. This is perhaps one of the reasons why many renters stay away from such an initiative. Maybe because they haven't had the luck to find the right professional or simply because of the lack of funds to afford a house. And for all those potential first-time home buyers who rent year after year, I will say by continuing avoiding such responsibility, they are all losing the chance to earn equity and wealth. If in contrast, however, you realize it is now the time to invest in a property of your own, pay attention to what I will tell you next. After doing this for 23 years there is no need to worry as there is an amazing home loan program that can help you as it did hundreds of buyers I close year after year. One of the best First Time Home Buyer Programs in Houston is by far the FHA loan. This is a mortgage loan program administered by the Federal Housing Administration. It has been specially formulated for first-time home buyers in order to encourage the home buying initiative and give access to housing to the largest US population segment in need to secure a house of their own. It is a program extremely popular because of its reasonable down payment and flexible lending standards. If you want to opt for such loan program, you have to first look for a good home loan lending company and speak to their specialists so that they can find you the perfect solution according to your needs and budget. However, before you go ahead and sign up for the loan agreement, you must be aware of a few crucial points about this loan program. Here, we have enlisted a few of them for you. Take a look.

1. FHA Loans have Less Stringent Credit Scores As you must already be aware that the credit score rating system under the Fair Isaac Corporation is somewhere between 300 and 850. But the higher score you have, the better it will be for you. The Federal Housing Administration enables a borrower to purchase a house with even bad credit history. The rule is if a buyer has a credit score of about 580 or more, they will be liable to get a mortgage with just 3.5 percent of down payment. Moreover, you will be glad to know that the buyers who have a credit history between 500 and 579 must make at least a 10 percent down payment. Those people whose credit scores will be below 500 are generally considered to be ineligible for the FHA loans. The FHA will also make particular allowances for the applicants who can provide a twelve-month worth credit record alternatively from 3 separate accounts which are, in other words, called the 'nontraditional credit history'. The Federal Housing Administration makes mortgage credit possible for the buyers after undertaking careful analysis of the alternative credit payment records to disclose the intention and ability of the applicants of repaying the loans. But you can resort to a good home loan lending site to understand if you are eligible for this or not.

2. The FHA Loans Require an Approval for the Mortgage Lender You should be aware that The Federal Housing Administration is a department or an agency but not lenders. It is basically an insurance fund which can be borrowed by the home buyers to finance or refinance their homes. You need to realize that the borrowers must get the loans processed via a pre-approval method. It has to be a lender that is approved by the FHA. Also, you must know that the FHA-approved lenders might not all offer the same cost or the interest rate even if it is the same type of an FHA loan. So, be careful and resort to professional help in order to understand if you should opt for this or not.

3. FHA Loans have a Mortgage Insurance Another very important thing that you need to be aware of is the mortgage insurance. You should be aware of the fact that you must arrange for the mortgage insurance along with the interests for the FHA loans. This is another additional payment that you will have to make if you are opting for this loan. But there are certain rules which you will have to follow regarding this. The insurance premiums must be paid in a certain fashion. You must make an upfront payment of 1.75 percent of the entire loan amount. For instance, if the loan amount is $ 100,000, you have to pay $1,750. This upfront payment, however, can be financed on top of the loan so you don't have to pay it out of the pocket when you close on your loan. The next part of the payment is called the annual premium. Even though it is called so, it needs to be paid on a monthly basis. The amount of this will differ depending on the length of the loan and the initial loan to value ratio or what is commonly called the LTV. 

4. The Closing Costs of the FHA are also Important While you are taken up by the other essential things or costs which are incurred with this loan program, you should realize that the closing costs are also an immensely important part of the FHA loans. According to the Federal Housing Administration, the home sellers, lenders, or even the builders have the right to pay off some of the closing costs of the borrower. This includes the escrow reserve requirements, origination charges, the title expenses, and such other charges. The borrowers or home buyers can even ask the lenders to charge a higher level of interest on the loan in order to cover a majority of or even the entire amount of closing costs.

5. The Down Payment Sources are Flexible for FHA Loans Next, there is an essentially important factor which often becomes an obstacle when it comes to home loan programs. And that is the source of the down payment. You need to make sure that the sources you select are suitable for the home loan program you have selected as these often have restrictions. But fortunately, it is quite flexible for you in the FHA loans. You can choose from the several options you have to source the funds for your down payment. You can use your own savings to make the down payment or even resort to other things like the gifts from the family members or the state, local, or the federal government down payment assistance programs. But make sure the family gifts are pre-consulted with our loan officer and have the requisite paperwork in a trail in order for them to be accepted.

So, now that you know about these points and have safely taken it down, you can opt for the best mortgage lender in Houston to make your dream home come true again.  For any query or doubt, you can always resort to a good home loan lending site and get in touch with our specialists to guide you effectively not just with respect to the house but also what kind of loan you need but also the procedure.