Five Signs You Are Ready to Buy a Home with an FHA Loan
1) Buy A Home With an FHA Loan When You Know What Kind of Property You Want Versus What You do not Want
What does this mean? In some cases it means making the right home buying choice based on future plans. Do you need a starter home you plan to sell after a few years because you have an increase in family size?
Or do you need a “forever home” to settle into with no plans to sell or vacate? Maybe you wish to become a landlord and need a multi-unit property to live in while renting out the unused living spaces? Knowing how to select the kind of home you specifically need to meet your goals is a big part of the home buying process.
2) Buy a Home When You Have Enough Money Saved
Don’t make the mistake of thinking that if you have enough saved up for your down payment, you are ready to buy a house. There are other expenses you may need to deal with at the same time; if your home is appraised with corrections required, you will need to anticipate the cost of compliance inspections and related expenses.
Does your home need a flood zone determination? Or are there fixes or upgrades you want to pay for soon after moving in? Anticipate the unexpected and save extra money for those costs.
3) Buy a Home When You Have Been Employed Long Enough
If you are new to the job market, you will find most lenders need to verify a minimum amount of employment in order to approve the home loan.Your income will likely be required for the last 24 months, so anticipate your loan application accordingly.
4) Buy a Home When You Have Managed Your Debt
Too much debt and too little income will hurt your chances at home loan approval. Do you know your own debt-to-income ratio? If you don’t, you are NOT ready for a home loan. If you do, is it too high? Work on lowering your debt ratio long before you start working on your application paperwork.
5) Buy a Home When You Have a Plan
Until you have sat down and looked at your current budget compared to a projected one that contains a mortgage payment, you don’t really have a plan for paying off your mortgage loan.
You need to have a strategy for your own personal finances that includes knowing specifics about your debts, their payoff dates, and how you can improve your financial position over time. Once you have a plan, you are much closer to being ready for a mortgage loan.
Homebuyers Benefit From the Work Done by Fannie Mae
HUD 4000.1 is Sometimes Called the FHA Handbook
Credit History Is Presented as Your FICO Score
Do you know what's on your credit report?
Learn what your score means.