What You Need to Know about FHA Loans

While the home buying process is all about finding the perfect place for you and your family to call home, it’s also a significant financial commitment. As such, you need to pay close attention to the type of loan you ultimately use to buy the home. While you’ll get invaluable advice and guidance from your Long Island mortgage company, knowing a thing or two about the mortgages available, specifically FHA loans, will help make things easier on you.

What’s an FHA Loan?

As your Long Island mortgage company will explain to you, an FHA loan is a mortgage insurance solution. It’s a program offered by the Federal Housing Administration, part of the federal government. Note that the FHA is not a lender – they simply insure the loans given to borrowers by lenders.

It’s also important to note that you can’t get an FHA loan from any and all lenders. The FHA only approves certain lenders. So, the first part of your legwork will be finding an FHA-authorized lender (your Long Island mortgage company can help reduce the amount of effort you spend here).

Why Might You Consider an FHA Loan?

What is it about FHA loans that makes them so attractive? It’s really all about the protection offered to the lender. Because the lender has less risk, they’re able to offer some important benefits to the borrower (you).

There are also a few other perks that make these important tools for home buyers. For instance, you’ll find that the interest rate is considerably lower than with a conventional mortgage loan, meaning that not only will your monthly payments be lower for the same amount as with a conventional home mortgage, but that you’ll actually pay less over the life of the loan.

Another benefit here is that FHA loans come with lower down payment requirements. Any money you can save when buying a home is a great thing, and a lower down payment means more money left over for other needs, like insurance, repainting, repairs and the like. What’s more is that these loans are available to buyers without sterling credit. In an age when more lenders than ever have put stringent requirements in place for borrowers that can bar many people from owning their own home, this is a ray of hope.

Finally, FHA loans can be assumed by others. Let’s say that you get an FHA loan and you buy the home. You spend quite a few happy years there, but then your employer offers you a very lucrative job on the other side of the country. That means you need to sell your home and move. With an FHA loan, a buyer can actually assume the loan directly rather than going through the lengthy process of getting their own loan.

It’s Not All Golden

While FHA loans are great for many reasons, there are a few potential issues you need to understand. The most important of these is that you are required to have mortgage insurance. Actually, you need two types. You’ll pay the first one upfront when you buy the home. The second is a monthly payment.

You’ll also find that FHA loans are only applicable toward certain types of properties. You can’t buy just any old house you want. You’re required to have the home appraised by an appraiser with FHA approval to ensure that it meets those requirements. If it does not meet requirements, the seller can agree to make the needed repairs or changes, but that is up to them – they’re not required to do so. The only other choice is for you to pay for the repairs at closing.

So, Who Qualifies for FHA Loans?

As you can see, there are quite a few things that you’ll love about being able to get an FHA loan through your Long Island mortgage company. But will you qualify for one? That’s where things get a little sticky.

In order to qualify, you’ll need to meet a few requirements. One of those is that the amount you pay monthly for the mortgage, plus all other home-associated costs (insurance, HOA fees, etc.) cannot exceed certain ratios.   You need to have a credit score of at least 500, and you must use the property as your primary residence (no vacation homes, second homes, or rentals).

There are other things you’ll need to consider before deciding that an FHA loan is the right fit for you, and your Long Island mortgage company can help. If you’re ready to consider buying a home, get in touch with Reliant Home Funding to discuss your options and learn what you’ll need to know to get through the process.

President

Gregory A. Topal

Gregory is Co-Founder and Licensed Loan Originator at Reliant Home Funding, Inc., a Long Island based Mortgage Company.  Gregory currently holds a Mortgage Loan Originator License in NY, NJ, CT, CO, FL and PA and plays an active role in running the company. (NMLS #: 38684)

Gregory was raised in Long Island, NY and attended SUNY Oneonta receiving a Business and Marketing degree in 2004. Shortly after graduating he started a career in Real Estate and has been fortunate enough to advance his career throughout the years. He believes his success can be attributed to consistently striving to exceed the expectations of his clients and colleagues.

Email:gtopal@rhfny.com

Direct:631-446-3103

Zillow:http://www.zillow.com/profile/gtopal/

NMLS::38684

Crucial People You’ll Interact with During the Home Buying Process

For most people, the assumption is that the process of buying a home only involves a few people. Obviously, you’re part of it (the buyer), and then there’s the seller, too. There will most likely be at least one real estate agent involved (more likely two – one for you and one for the seller). However, the reality is that there are far more people you’ll interact with during the process, from the buyer’s agent to the mortgage broker you work with. It pays to have at least some understanding of these professionals, and the roles they play in the process.

Before You Start

Before you start shopping for homes, if you’re smart, there are a few people you’ll interact with. One of those is your Long Island mortgage broker. This allows you to get your loan application fast-tracked and start the process immediately. It also means that you’ll know exactly how much you have to spend before you fall in love with a home that’s out of your price range.

You’ll also work with a real estate agent in most cases. Really, the smartest move is to work with a Long Island mortgage broker, and then find yourself a reputable realtor in the area you’re considering. Note that there’s a difference between real estate agents and actual realtors. You may also work with a real estate broker (they hire agents and realtors).

During the Process

Obviously, once your Long Island mortgage broker has provided you with approval on the loan and the amount you’re able to spend, the next people you’ll meet will be the seller (or sellers if you’re looking a more than one home) and their agent(s). You may here these professionals referred to as either seller’s agents or listing agents, but they’re the same.

You should also work with a licensed home inspector. Never buy a home without first having it professionally inspected. You can choose to hire your own, or the seller may provide a report from a reputable inspector in the area.

Next up is the property appraiser. Essentially, these professionals are responsible for ensuring that you’re actually getting what you pay for. They value the property, compare it to the value of homes sold in the surrounding area, and generally make sure that you’re not paying too much for the home.

You will also need to find a homeowner’s insurance provider. You’ll work with an insurance agent. Depending on your wants, needs and situation, you may be able to get homeowner’s insurance through the insurer you work with for auto insurance, but that’s not always the case.

It’s possible that there may be title issues with the property you’re purchasing. To ensure there aren’t, you’ll have to work with a titling company or a settlement agent. They’re responsible for researching the title and ensuring that there are no other claims against it that might prevent you from being recognized as the owner (liens, claims by other family members, etc.). Once the research is over, they’re handle filing the paperwork for you.

After you’ve found the perfect home for your needs, you’ll go back to working with your Long Island mortgage broker. At this point, your broker will submit the address of the property to the underwriter, and the loan process will move forward. Now comes the time when you’ll choose the type of mortgage that’s right for you (adjustable rate, fixed rate, FHA, etc.). Within a short time, you’ll go from choosing the mortgage type you want to the actual processing and underwriting. Once that’s done, you’ll be the proud new owner of your first home.

Of course, there are other people you might meet during the process, depending on your specific situation. For instance, if you’re buying a fixer-upper, you will need to work with a remodeling expert or general contractor. You might work with a flooring installer if you want to replace that aging shag carpet, or a carpenter to fix the old deck on the back of the home.

No matter how you cut it, there are plenty of people you’ll work with during the home buying process. Two of the most crucial are the Long Island mortgage broker you choose and the real estate agent you work with. Both can “make or break” the process and it pays dividends to make sure you’ve chosen wisely before getting started.

If you’re ready to take the plunge into home ownership, get in touch with the experts at Reliant Home Funding to take care of the financial aspects of the process.

President

Gregory A. Topal

Gregory is Co-Founder and Licensed Loan Originator at Reliant Home Funding, Inc., a Long Island based Mortgage Company.  Gregory currently holds a Mortgage Loan Originator License in NY, NJ, CT, CO, FL and PA and plays an active role in running the company. (NMLS #: 38684)

Gregory was raised in Long Island, NY and attended SUNY Oneonta receiving a Business and Marketing degree in 2004. Shortly after graduating he started a career in Real Estate and has been fortunate enough to advance his career throughout the years. He believes his success can be attributed to consistently striving to exceed the expectations of his clients and colleagues.

Email:gtopal@rhfny.com

Direct:631-446-3103

Zillow:http://www.zillow.com/profile/gtopal/

NMLS::38684