Importance of FHA home inspection

Every home buyer should go for a FHA home inspection. When you want to buy a home, you want the home to be in proper condition. You don't want to face any problems in future or spend thousands of dollars in repair works. Getting a home inspection from a trained expert before buying a home is an intelligent step.

A home inspector will evaluate all the physical conditions of the home including construction, structure and mechanical systems. A inspector will also evaluate the working of major equipments (plumbing, air conditioning, electrical etc.) Inspector will provide the buyer with the detailed information about the home and any repair works that are needed in the home.

One thing home buyers should understand is that the home inspector will not evaluate the value of your home. Home inspection is different from an appraisal. Appraisal provides you with the estimated value of the home which is required by the lender before your FHA loan approval so that you don't borrow more than the value of the home.

FHA loans vs. Conventional loans

FHA loans have many benefits when compared to conventional loans. There are many benefits for the borrower and also for the lender as FHA loans are less riskier for the lenders as the loans are insured by FHA.

• Down Payment: For FHA loans only 3% down payment is required, while for a conventional loan minimum of 5% down payment is required and it can go up to 15%.

• Credit Scores: For conventional loans you require perfect credit scores while credit score is not an issue if you are applying for a FHA loan.

• Monthly Mortgage payments: It is less in FHA loans as compared to conventional loans.

• Property standards: FHA has certain property standards while conventional loans don't have any property standards. FHA Homes should be inspected properly and should be perfect for living.

Also, you can apply for a FHA mortgage loan after two years in case of a foreclosure and after three years in case of a bankruptcy.

Advantages of FHA streamline refinance

Advantages of FHA streamline refinance are:

• Biggest advantage of FHA streamline refinance is that there is no appraisal required. Most people don't qualify because there homes don't enough value, but if your qualify for streamline refinance, then it is not an issue for you.

• Most of the mortgage loans have high closing costs but FHA streamline refinance have very low closing costs.

• FHA streamline refinance can be wrapped up quickly as no appraiser to visit your home or verification of your employment as once you qualify for a FHA loan, these qualifications are carried over to FHA refinance mortgage.
  

• Another big advantage of streamline refinance is that "no income verification", so you don't have to worry about your income if it has been dropped.
  

Tips to secure your FHA home loan

There are certain factors that you must keep in mind to secure your FHA home loan. Below are some simple tips on how you can secure your FHA insured mortgage.

• Credit score is the most important factor. You must clear your previous debts and should increase your credit score before going for the mortgage.

• You should not increase unnecessary debt using credit cards. You must limit its use and your spending money should be cash.

• You should consider your present financial conditions. If you don't have much savings and a good career then first you must improve your financial standing before buying a home.

• You must completely understand the procedure of the FHA loan processing and also pros and cons of the market before applying for the loan.

• You should compare the interest rates and the loan program of several lenders before finanlizing the loan.
  

FHA loan guidelines

When you apply for FHA loan to buy a home, there are certain guidelines that you must meet. Among them most important are your relative mortgage amount and your income. FHA does not want that your mortgage payment (includes principal, interest, taxes) to be more than 31% of your gross income and also your monthly debt obligation including mortgage should be not more than 43% of your income.

You must collect all information and put them in a file send it to an underwriter. The underwriter decides whether you are approved or rejected after reviewing your file. You should understand what are the important information that you must include in your file.

SOME OF THEM ARE:

• Social Security Number
• Address of your residences for the past two years
• Information of your employer for the past two year
• Current gross income
• Complete information about your bank accounts
• Detail of any property you owe.
• estimated value of the home.

FHA loan processing

FHA loan processing is the most important part of your loan process. You must verify your file from any FHA approved lender to check whether all the documents are in order or not. You can add if any documents are missing. Following steps are taken while your FHA loan file is processed.

• Employment verification: Your form is sent to your present and past employers to verify your job and income for the past two years.

• Deposit Verification: Your form is sent to your banking institutions to verify your account balance for the past three months.

• Letter of Explanation: A letter of explanation written by the borrower explaining any issues regarding credit scores, bank account deposits, source of funds etc.

• Appraisal: It is ordered by a FHA approved appraiser, who will visit the property and verify it for FHA requirements, size of the property and will determine the value of the home.

• Additional documents: Some additional documents may be required depending on your case scenario. These documents vary for every individual's scenario.