FHA Loans Help The First Time Home Buyer “Get In.”
Almost the whole pool of available FHA loans are being provided to first time home buyers. The popularity of FHA loans has risen dramatically in the last few years. This is caused folks to strongly consider an FHA loan when financing a house. An FHA loan is the most flexible, “makes sense” loan available in the marketplace today. It is what is driving the local Sonoma County, CA mortgage market. FHA loans are helping more and more people take advantage of this highly affordable real estate market. In fact, the FHA program will likely be the most popular home loan program for the foreseeable future.
First Home Buyers can begin researching FHA loans online or by calling a local mortgage company.
Where to start? The first thing is to do some research online and understand some of the unique characteristics of FHA loans. A few examples of these are lower limits for qualifying credit scores, as in 640 or higher, 3.5% down payment, non-occupant co-borrowers, and lenient credit qualifying guidelines. Once you have a general understanding of FHA lending, the next best step is to contact a local mortgage company to determine how much you can qualify for. Borrowers should not try to do this on their own. They need to hire a loan officer who can walk them through the steps of financing a house. First time home buyers are usually very easy for an experienced lender to qualify right up front because they don’t own real estate, yet. A local mortgage lender can easily provide solid numbers and help the first home buyer through the maze of getting qualified.
First Home Buyers must face the reality that qualifying for less house could be a good thing due to the affordability factor.
That’s right, qualifying for less house is not necessarily a bad thing. Remember all mortgage lending today, including FHA Lending wants to make sure there is no payment shock when that first monthly bill arrives in the mail, and that the payment will actually get made for the next 30 years. This might mean purchasing less house on the front end, and being able to use that extra money that otherwise would have been the down payment, to fix up the house or make home improvements.
You should not rely solely on the mortgage lender telling you how much you can afford, you should look at your own monthly finances and YOU make the decision on affordability. Remember your loan officer is working for you and they need to be your fiduciary.
The last component is getting an official FHA preapproval for financing a house.
After the research has been completed, and qualifying has been done, the next step is the preapproval which is what your lender does when you send in your financial documentation. This process is to ensure you can actually close on that house you are thinking of purchasing. Your realtor will also want a preapproval letter from your loan officer stating how much you are preapproved for and how much down payment you are putting providing. This is especially important: a qualification is not the same thing as a preapproval. The loan officer will need your pay stubs for the last 30 days, two years tax returns, as well as two years W-2s and the most recent bank statements for the last two months. Any mortgage lender offering FHA lending is going to require these items to make sure if you get into contract on the home you ultimately make an offer on.
All mortgage companies work the same; however, each one offers different programs, may have varying interest rates, and the big separator is service. You need to make sure you are working with a loan officer that is is responsive. Financing a house is a very large financial transaction and should be done with somebody whom you feel comfortable with. Communication is a big factor in purchasing a home and first time home buyers deserve the reassurance that it’s actually going to happen for them. If you are First Time Buyer and want to learn more about FHA loans, contact Scott Sheldon, local mortgage lender.