Shopping for Your First Dwelling With An FHA Mortgage
What do you need to consider when buying your first home? When exploring your FHA home loan options, there are a few things to keep in mind – while FHA mortgages require a 3.5% down payment, you can request local down payment assistance to help offset these costs.
A first-time home buyer may have state and local programs available to help.
But that’s just one aspect to consider when buying your first home. Some don’t know how flexible an FHA mortgage can be. You can choose a typical suburban home to buy, but you also have the option of an FHA RV loan, FHA home loan, etc.
One thing to keep in mind with all of these options – FHA loans do not allow any penalty for early repayment of the FHA loan by refinancing or selling the home or simply by making larger payments.
Compare that to some traditional loans that have such penalties.
Some borrowers want to buy a home for the first time, but have no illusions that this property is more than a “starter home”. If you plan to sell the property long before your mortgage payments are completed, consider the option of an adjustable rate mortgage, which may have a lower introductory rate.
Borrowers looking to stay in the home for the long term should likely avoid a floating rate mortgage unless they have a specific strategy for dealing with the end of the “teaser rate” period and the start of interest rate adjustments on mortgage loans.
If you don’t have or plan to exit out of an FHA adjustable rate mortgage, it may be better to avoid it.
Remember that a traditional lender may make rate adjustments on ARM loans more frequently than FHA mortgages allow – be sure to ask!
FHA home loans are not specifically or only for first time home buyers. What does that mean? As for the FHA loan guidelines, under the FHA loan rules, new borrowers do not get a special first-time benefit.
But as mentioned above, you can qualify for a government program and the OTHER thing to explore when shopping for a lender is whether one of your choices for a first-time buyer offers an option. Your financial institution may have a program. The FHA won’t, but your lender could.
For FHA home loans, you will find milder credit requirements, but generally expect to have a reliable employment record as well as a history of on-time payments for all financial obligations for 12 months or more prior to the loan application.
To get the most out of an FHA mortgage, find the right lender, work on your loan a year or more before your loan application, and get a home inspection in addition to the evaluation your lender requires. You will be very glad you did.