The FHA (Federal Housing Administration) 203b mortgage insurance program is often referred to as the first time home buying initiative, despite its relevance for those purchasing homes at all points in their lives. This program works well for most adults looking to purchase a home but is most commonly used by first time home buyers due to its convenience, lower monthly payments and excellent refinancing program. If you are beginning to think about purchasing your first home, then it is time to explore how using the FHA program, more specifically the 203b mortgage insurance initiative, can help.
The First Steps
The first step to receiving a mortgage is to determine a monthly payment budget. Many experts recommend that housing costs should be no more than 30% of a person’s monthly income. To determine just how much a monthly payment could be, we recommend using our mortgage calculator.
Next prioritize home necessities that fit within that home cost budget. This means, making a list of must-have items for a home. Do you absolutely need a garage or a yard? If so, these items need to go on the list.
Following the creation of the home priority list and determining how much you can afford, contact a real estate agent and discuss with them your housing needs. They will begin finding homes that fit your specific requirements (cost and priorities) and you can begin the home purchasing search. You may also consider getting pre-approved to allow you to put an immediate offer on a home when the perfect one comes along.
Finding a FHA Approved Lender
The FHA has several regulations, rules and standards that must be adhered to when purchasing a home. To help you, your mortgage and your dream home meet those standards, it is suggested to hire an FHA approved lender. This lender will be able to walk you through the entire 203b buying process and ensure you have turned in all the paperwork you will need. We work with several FHA approved lenders and would be happy to put you in contact with one in your specific area, so feel free to contact us today to find your FHA lending expert.
FHA Appraisal and Inspections
After your lender has received the necessary paperwork, your real estate agent has found your dream home and you’ve placed an offer, it is time to go through the required process of home appraisal and inspections. The FHA requires that all properties recommended for FHA mortgage insurance undergo an appraisal and a home inspection. These two processes are in place to protect you, as a future homeowner, the lender and the FHA’s investment in your dream home. After these inspections have taken place and the home has been appraised at a fair value, it is time to complete the home buying experience with what is commonly referred to as “Closing.”
The home buying process can be rather short if you work with the correct professionals such as a FHA approved lender and a good real estate agent. Closing is the final phase to purchasing a home and it is at this point that the FHA requires a certain percentage of the loan cost as a down payment. Your lender will tell you that amount a head of time and we recommend coming to closing with that exact amount in the form of a cashier check. Once the final documents have been signed and the down payment has been paid, it will usually take one business day for everything to clear and then you are the owner of your first dream home.
Your Dream Home
FHA home loans enable many first time home buyers to purchase their dream home in a few short months. With lower monthly mortgage costs and an FHA insured mortgage, this option increases the chances of being approved for a home loan and for receiving financing for your first home.
Photo Credit: Armchair Builder