Questions to Ask About Your FHA Home Loan
Questions to Ask an FHA Lender: Interest Rates
Depending on your financial needs and goals, you may wish to explore the option of an Adjustable Rate FHA Mortgage compared to the fixed rate loan. Adjustable Rate Mortgages, also known as ARM loans, often feature a lower introductory interest rate.
If your priorities for your new home loan include a lower interest rate the ARM loan may be for you, but don’t apply for an ARM loan without a long-term strategy on how to deal with the changes in interest rate once the introductory period ends.
You may wish to refinance into an FHA fixed rate loan then, especially since the FHA Streamline Refinance loan can let you get out of an ARM loan into a fixed rate with no FHA-required second credit check.
Ask the lender to compare rates on both fixed and ARM FHA loans to see what the better rate might be initially.
Questions to Ask an FHA Lender: Closing Costs
Always ask the lender for a rundown of the closing costs you will have to prepare for including any transaction fees, settlement charges, broker fees, etc. Also be sure to ask which closing costs may be financed and which may not. Remember that FHA Loan rules state clearly that your down payment is completely separate from closing costs and the amount of those costs are not considered part of your down payment.
Questions to Ask an FHA Lender: Loan-Specific Details
Your requirements for purchasing a condo with an FHA mortgage aren’t the same as those for a mobile home or a house built from scratch for you with an FHA One-Time Close Construction Loan. Be sure to ask about any special requirements for the type of property you wish to buy.
For example, if you buy a condo unit with an FHA loan, the condo project must be on or added to the FHA approved condo project list. If you buy a mobile home with an FHA mortgage, it must be transported directly from the dealer or factory and placed on the land it is to remain on permanently. Those applying for construction loans are required to have all necessary permits and other locally-required paperwork to begin the construction project.
All those details are important to know up front, and whether the lender has any additional requirements above and beyond FHA home loan rules found in HUD 4000.1.
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