Home Buying Problems to Avoid
August 5, 2023
How can you avoid common problems when buying a home with an FHA mortgage? Whether you want to buy a new home or refinance the one you are currently in, there are some steps you can take to prevent certain problems along the way.
Down Payment Problems
Some borrowers rely on down payment assistance programs, gifts from family members, or other sources of funds outside personal cash or investments. But if you get a down payment gift, your lender will require the same sourcing information as if you had provided it yourself.
FHA home loan advice in this area? When you accept gift funds for a down payment, have the giver write a letter explaining exactly where the money comes from.
Your lender needs to know it wasn’t sourced through a payday loan, credit card cash advance, or someone with a financial stake in the outcome of the loan.
House Problems
If you don’t research the deed to your home or perform a title search, you may experience trouble in the form of unexpected liens on the property, restrictions on the type of structures you can add to the property or other issues.
House problems also include issues that can only be detected with a home inspection in addition to the appraisal. If you want to buy an attractive home in the suburbs, you’ll want to know if those ‘burbs are subject to floods, mudslides, avalanches, hurricanes, or other issues.
Some think only of the future when considering those weather problems. But it pays to think about the past before buying a home. Why? A good, non-real estate example is in the used car market. Ever heard of a “Katrina car?”
A Katrina car is a used vehicle that was flooded during Hurricane Katrina, relocated to another state, and sold as a used car but not necessarily with full disclosure that the car was a “flood victim.”
How interested in that beautiful suburban home would you be if you knew it had the entire basement flooded after a major storm or natural disaster?
Do Your Research
It pays to take the time to pay for a title search and a home inspection. But there are other resources. You can consult a weather website for historical data about floods or forest fires in the neighborhoods you are considering.
You can look up crime stats, cost of living indexes, and even construction permit times for FHA loans associated with renovation or building a home from the ground up on your own lot.
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Down Payment Problems
Some borrowers rely on down payment assistance programs, gifts from family members, or other sources of funds outside personal cash or investments. But if you get a down payment gift, your lender will require the same sourcing information as if you had provided it yourself.
FHA home loan advice in this area? When you accept gift funds for a down payment, have the giver write a letter explaining exactly where the money comes from.
Your lender needs to know it wasn’t sourced through a payday loan, credit card cash advance, or someone with a financial stake in the outcome of the loan.
House Problems
If you don’t research the deed to your home or perform a title search, you may experience trouble in the form of unexpected liens on the property, restrictions on the type of structures you can add to the property or other issues.
House problems also include issues that can only be detected with a home inspection in addition to the appraisal. If you want to buy an attractive home in the suburbs, you’ll want to know if those ‘burbs are subject to floods, mudslides, avalanches, hurricanes, or other issues.
Some think only of the future when considering those weather problems. But it pays to think about the past before buying a home. Why? A good, non-real estate example is in the used car market. Ever heard of a “Katrina car?”
A Katrina car is a used vehicle that was flooded during Hurricane Katrina, relocated to another state, and sold as a used car but not necessarily with full disclosure that the car was a “flood victim.”
How interested in that beautiful suburban home would you be if you knew it had the entire basement flooded after a major storm or natural disaster?
Do Your Research
It pays to take the time to pay for a title search and a home inspection. But there are other resources. You can consult a weather website for historical data about floods or forest fires in the neighborhoods you are considering.
You can look up crime stats, cost of living indexes, and even construction permit times for FHA loans associated with renovation or building a home from the ground up on your own lot.
------------------------------
RELATED VIDEOS:
Here's the Scoop on Conventional Loans
When Do You Need a Cosigner?
Analyzing Your Debt Ratio
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