FHA is a mortgage where private mortgage insurance is subsidized by the Federal government. Most major mortgage companies offer the program. Although it is commonly used by first time buyers, it is not limited to them. This blog offers MA FHA Mortgage Overview and pre-approval guidance to help you decide whether it is a mortgage that you should consider.

Benefits Of FHA Loans

There are several important benefits of FHA loans. The minimum down payment for FHA mortgages is 3 percent, which aids buyers who do not have a lot of funds saved. They also allow borrowers to use gift money for the down payment and closing fees. An additional benefit is the simplified refinancing process. It allows a refinance to a lower payment without needing a new appraisal, which is helpful if loan rates and home values both drop. The mortgages may also be assumed, meaning that it may be transferred to a borrower (if they qualify). This can help if interest rates are high. Finally, FHA does not penalize buyers for FICO scores. Although home buyers must still have satisfactory credit, higher interest rates do not result from lower scores.

Disadvantages Of FHA Financing

There are disadvantages of FHA financing to note. FHA mortgage insurance (MI) is often more than a conventional loan. There is an up-front fee at closing and a repeating fee due each month until the loan reaches 80 percent of the purchase price or current appraised value (borrowers must request the removal of PMI or wait for the legally required lower threshold for it to be automatically removed). For condo purchases, the complex must satisfy specific criteria such as minimum reserve funds and sufficient owner occupancy percentages. Most converted duplexes may be difficult to get approved. Single family real estate must also meet certain requirements geared towards safety.

FHA Pre-approval Guidance

Prior to applying for a pre-approval, pull your credit score and correct any mistakes. Also gather important financial documentation such as bank accounts, tax forms from past years, recent pay stubs, and investment account statements. Underwtiters will routinely ask for a copy of these items. Consult with a loan officer to obtain potential monthly payments (based on a specific purchase price and your credit qualifications) and closing fees prior to advancing too far in the process.

MA FHA Mortgage Overview

FHA makes buying a home possible for certain buyers who may otherwise not qualify for financing. It may also make refinancing or listing a home less complicated if rates dramatically change. However, it does have higher fees and property requirements, so not every buyer is able to or may wish to select an FHA loan. Consult with an FHA loan professional to better evaluate this program.

When thinking about purchasing real estate, it is understandable to be very excited and want to start visiting properties right away. In that excitement, you may delay the vital step of requesting a mortgage pre-approval. A pre-approval is a basic review of your finances and credit worthiness to determine whether you are likely to be approved for financing. It is not a guarantee for a mortgage, but the best estimation prior to a full mortgage application. Having a pre-approval ready is important for many reasons. This article details reasons why buyers should obtain pre-approvals before seeing Burlington MA real estate.

Understand Your Price Range

Mortgage requirements and interest rates change frequently. A pre-approval will give you a clear understanding of the programs and alternatives available, what your up-front expenses will be, and more importantly, your price range. Without this, you may waste valuable time looking at homes that you can not finance or that are simply beyond your affordability. Knowing your price range also minimizes the emotional distress of viewing and wanting a home that you cannot purchase. This is one of the most important reasons why buyers should obtain pre-approvals before seeing Burlington MA real estate.

Strengthening Your Leverage

Burlington MA real estate with highly sought after amenities or the best price always move fast. A pre-approval gives you the power to make an offer on a hot listing. When you submit an offer, you usually must include a pre-approval letter. This illustrates to the seller that you are ready, willing, and able to purchase. It is unlikely that a seller would accept an offer and take the chance on a buyer without any verification that a buyer can even pay for the home. In multiple offer situations, a pre-approval is even more essential.

Time Savings

A pre-approval saves time during the offer process and when your loan is processed. Many sellers require a pre-approval with offers. Not having one ready will lead to delays in submitting your offer and may cause you to miss out on a property. Pre-approvals entail verification of income, assets, debts, etc. This may take some time depending on whether you have the information available. Errors in your credit reports can lead to additional delays. Starting and completing this step in advance will also save valuable time when processing your loan and achieving a quick closing.

Reasons Why Buyers Should Obtain Pre-approvals Before Seeing Burlington MA Real Estate

The details above on reasons why buyers should obtain pre-approvals before seeing Burlington MA real estate is something to remember when thinking of buying real estate. The real estate process can be complicated and stressful to begin with. Being diligent and prepared can minimize the stress and problems encountered along the way. For additional information, contact Peter DaMore at Law Offices of Peter T. DaMore Jr. by emailing pdamore@ptdlaw.com or calling 781-229-7900.