Buying a home for the first time can be wonderful, especially when the FHA loan program is there to finance your home and realize your dream of homeownership. Insured by the Federal Housing Administration, this loan is available as low as 500 credit score and 3.5% down payment. As the eligibility is much lenient than conventional home loan programs, first time home buyers prefer FHA home loans over other loan programs.
And as there are several FHA-approved lenders, who offer an FHA loan with 3.5% down payment, getting one will not be much difficult for you. But if don’t have prior experience of applying for a home loan program, you are more likely to make some mistakes. To save you, here, we have listed down a few mistakes that you should avoid making –
Making credit card misuses
Your credit card plays a vital role when you apply for a home loan program. Your credit card history determines how good or bad your credit score will be. Credit card misuse, such as overuse of credit cards, applying for new cards, not clearing the debts on time can hurt your credit card and lower the credit score. The lower your credit score, the higher the mortgage rate will be. Besides, bad or poor credit score can even prevent you from qualifying for a 3.5% down FHA home loan. So, be careful and restrict you from making these mistakes.
Not using a mortgage calculator
If you start your search for a home and are about to apply for an FHA loan with a 3.5% down payment without knowing how much home you can qualify for, then you are making a mistake. When you have a firm knowledge about how much home you can qualify for, you make the plan for home searching and loan applying wisely and execute it accordingly. But it will not be possible when you will not use a mortgage calculator. Using a custom-designed mortgage calculator for the FHA Loan program can help you with this. Visit https://www.clearlending.com/en/calculator to know it.
Not researching mortgage lenders
Finding a great mortgage lender is a must in a competitive market, especially for first-time homebuyers who are not familiar with the nook and corner of the mortgage market. While a newbie or inexperienced lenders will misguide you, a seasoned FHA mortgage lender can help you set goals and secure a loan within your budget. And once you fund the lender, you can trust, you can feel more confident in the steps that can take to help protect your finances.
Not choosing an FHA approved lender
If you choose any random home loan lender and apply for an FHA loan, it will be a great mistake for you. Lenders, other than the FHA-approved ones, are not familiar with the guidelines of the FHA, and so, they can’t guide you properly. Besides, there is a huge possibility that they say there is nothing such as an FHA loan with a 3.5% down payment or they might ask for higher mortgage rate. To avoid such things, you should always choose a reputable FHA-approved lender to apply for the home loan program.
Avoiding these mistakes helps you to ensure an FHA loan with a 3.5% down payment. You can consider this real-life example, where a house was sold on 12/13/2019 at 10026 Lynnwood Dr, Baytown, TX 77521 for $225,000 with 4 bedrooms and 3 bathrooms and the size of the home is 2,222 Sq Ft. With an FHA home loan program, the down payment would be only 3.5% or $7,875 and the loan amount is $217,125 and the cash to close including closing costs could be $5,603.75.
So, be careful to save you from the mistakes and without thinking any further, opt for an FHA-approved mortgage lender today.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.